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Ethers (ETH) price continues to underperform compared to Bitcoins (BTC) 2024 gains, but Glassnode analysts suggest that brighter days could lie ahead.

Data from Cointelegraph Markets Pro and TradingView shows that Ether has been underperforming Bitcoin over the last two years, resulting in a weaker ETH/BTC ratio, which reached a low of $0.04622 on May 1, the lowest since April 2021.

Glassnode said Ethers under-performance this cycle relative to Bitcoin is due to a measurable lag in speculative interest from short-term holders (STHs).

The report defines the STH cohort as investors who acquired their coins within the last 155 days and are often considered a proxy for new investor demand.

Glassnode analysts explained that BTC experienced a noticeable increase in speculative activity in terms of capital accumulation among STHs in the run-up to all-time highs in March. This has not been reflected in ETH, which is yet to breach its previous all-time high.

The firms on-chain data reveals that while Bitcoins STH-realized cap is nearly at the same level as the last bull run peak, ETHs STH-realized cap is still less than half of previous cycle levels, suggesting a markedly lackluster inflow of new capital.

Related: Bitcoin exchange inflows drop to 10-year lows after $74K all-time highs

Historically, Ethers price performance has been closely linked to Bitcoin price moves, and the recent price action reflects this relationship.

Bitcoin experienced a sell-off after the fourth halving, dropping 11% to a two-month low of $56,500 on May 1. Bitcoins price has since recovered, consolidating within the $62,700$65,550 price range over the last two days.

Ether experienced a similar correction after the halving with a 6% drop, recording the worst post-halving performance ever, according to Glassnode.

However, measured from the $73,835 all-time high, Glassnode noted that Bitcoins price fell by 20.3% the deepest correction on a closing basis since the FTX lows in November 2022.

Using the Net Unrealized Profit/Loss (NUPL) metric, the on-chain data analytics firm found that both ETH and BTC still have a relatively low realized cap associated with long-term holders (LTHs), suggesting the market is within the early stages of a macro uptrend.

In an earlier report, Glassnode established that capital inflows into ETH tend to lag behind those into BTC. For instance, during the 2021 cycle, the peak influx of new capital into BTC occurred 20 days before the peak influx into ETH.

Using a 30-day change in the realized cap to monitor the rotation of capital between these two assets, Glassnode analysts found that ETHs STH realized cap is yet to pick up momentum in the current cycle.

Glassnode concludes that while the post-halving market action has played out remarkably similar to previous cycles, several data points indicate that Ether has underperformed relative to BTC.

This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.

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Ethereum price lags due to 'weaker capital rotation,' but crypto macro uptrend remains - Cointelegraph

In proof-of-stake (PoS) blockchains such as Ethereum, the networks security syncs with the number of active validators, the percentage of circulating tokens staked, and the allocation of these tokens among the active validators. Restaking mechanisms incentivize these staked tokens otherwise lying inactive to improve the overall functioning of the blockchain.

This article discusses what restaking is, the types of restaking, how liquid restaking works, collective security using staked Ether and concerns regarding restaking.

Restaking presents a novel concept in cryptocurrency security, enabling stakers to use their Ether (ETH) in the consensus layer more than once. It allows stakers to increase their rewards while strengthening the security of the staking network by facilitating the deployment of liquid staking tokens with validators across several networks.

Staked tokens usually sit idle on PoS blockchains. Restaking activates staked tokens, facilitating higher staking rewards for restakers. Whether someone is staking Ethereum directly or using a liquid staking token (LST), they could use a restaking protocol such as EigenLayer to receive additional rewards on their staked tokens.

The sheer number of validators on the Ethereum network participating in the PoS consensus mechanism makes it stand out. But staked ETH lies dormant. Thanks to liquid staking protocols, the staked ETH gets converted into fungible tokens, enabling stakers to use it in decentralized finance (DeFi) applications. The mechanism sets aside the minimum 32 ETH staking cap, enabling users with smaller holdings to earn staking rewards.

Restaking can broadly be segregated into native and liquid restaking. Native restaking is available to users who run an Ethereum validator node. It functions through a set of smart contracts that supervise the management of assets staked inside a validators node.

Validators can benefit from the crypto-economic security offered by restaking protocols and can stake their tokens with them. To participate in a restaking program, validators need to install and execute additional node software for the restaking module.

Liquid restaking involves users utilizing liquid staking tokens (LST). When a staker stakes their assets with a validator in this procedure, the validator grants them a token that represents their stake. The staker would restake the LST to earn additional rewards.

Let us use the example of EigenLayer to understand how liquid restaking works. With a total value locked (TVL) of over $250 million, EigenLayer effectively acts as a bridge between Ethereum and other blockchain applications, offering both pooled security and a marketplace for it.

EigenLayer functions as the foundational framework for restaking. Anyone who has already staked their ETH directly or through liquid staking solutions can engage with EigenLayers smart contracts. This allows them to restake their holdings and contribute to the security of various platforms, effectively creating a collective security mechanism powered by Ethereum.

Here is the process to restake on EigenLayer

Step 1: Click Restake at the right of the top menu on the EigenLayer website.

The EigenLayer app will appear in the next tab, where the user can complete the restaking process.

Step 2: Click the Connect wallet button at the middle of the top. Users can select between MetaMask, Coinbase Wallet, WalletConnect and OKX Wallet.

At the top right, users can see an icon with three horizontal lines. Users can access support documentation, blogs, Discord and forum sections through it.

Step 3: In the section Liquid Restaking, click on the chosen LST.

Suppose a user selects Rocket Pool Ether. They can deposit or unstake on the window that appears. At the time of writing, deposits are paused.

Typically, launching a new protocol involves establishing a fresh network of trust for security purposes, which includes setting up a network of validators and introducing a native cryptocurrency.

Restaking changes the game by allowing these protocols or active validator sets (AVS) to leverage the collective security from Ethereums stakers, making development much more efficient. These AVS, also called EigenLayer modules, can range from sidechains and bridges to oracle networks, keeper networks and data availability layers.

In the past, an attacker could potentially breach the security of one of these AVS to cause disruption. However, with EigenLayers model of pooled security, any such attempt would require challenging the entire collective stake, valued at billions of dollars. Participating in EigenLayers smart contracts, however, introduces additional risks, including the possibility of increased slashing conditions for a users staked ETH.

For those staking their Ethereum, this model offers the chance to earn higher returns by securing various AVS with their restaked ETH without needing different tokens. EigenLayer facilitates this through a marketplace where AVS can attract the support of Ethereum validators, who are then able to select which modules to back based on the incentives provided.

A common concern about restaking is about the allocation of funds repeatedly to similar validators, increasing both yield and risk. Developers have warned that excessive leverage could result in the instability of projects. According to them, if more financial risk is embedded into the blockchain itself, it would only destabilize the whole ecosystem. Vitalik Buterin, a co-founder of Ethereum, has cautioned that restaking protocols could expose the blockchain to significant systemic risk.

The rapid growth of restaking protocols means the associated risks are also escalating, demanding immediate attention. A voluminous failure could undermine the security of the underlying blockchain. In 2022, Ankr, a restaking protocol built on the BNB network, was exploited, and it should serve as a preview of a possible catastrophe for a blockchain network.

However, considering the possible risks posed by restaking, it can be deployed in scenarios with low-risk misbehaviors, like double signing, without compromising Ethereums decentralization norms.

As restaking continues to evolve, it is likely to emerge as a key DeFi component, drawing more liquidity and users into Ethereum staking, which historically has lagged behind other PoS networks in staking ratio. Through the synergies of LST and restaking, Ethereums staking ecosystem may see significant growth.

Possible risks to layer-1 blockchains due to restaking suggest a cautious approach regarding the development and deployment of staking services. Resolving potential conflicts after restaking gains significance will help prevent negative effects. Factoring in the long and short-term effects of restaking on the Ethereum ecosystem may result in a win-win situation for every staker.

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What is restaking, and how to restake Ethereum to boost rewards? - Cointelegraph

Ether (ETH) had been rallying since the beginning of the new year but began tapering off in mid-March. The altcoin has trailed Bitcoin (BTC) since Jan. 1, gaining roughly 48% compared to BTCs 57% in their respective USD pairs year-to-date.

There are three main reasons why ETH has been underperforming BTC throughout the past several days, including a decrease in network activity and declining sentiment surrounding the approval of spot Ethereum ETFs in May.

Ether is down 13.5% over the last 30 days, underperforming Bitcoin and other top layer 1 tokens. BTCs price has dropped only 4% over the last 30 days, while other top-cap layer 1 tokens, such as BNB Chains BNB and Solanas SOL, have rallied 15.5% and 16%, respectively, over the same timeframe.

The ETH/BTC ratio began declining on March 8, reaching its year-to-date low of $0.047 on April 7.

There are several reasons why Ether has underperformed Bitcoin over the last month, including new all-time high prices, over $10 billion in investments into the spot BTC ETF, and Bitcoin Ordinals trading volume surging close to $3 billion. The upcoming Bitcoin supply halving, which has historically preceded a crypto market bull run, has also added to BTCs tailwinds.

Investigating Ethereums network activity, including its scaling solutions, can also give insight on why Ether continues to underperform BTC. Decentralized applications (DApps) are at the core of this layer 1 blockchain, and diminishing use in terms of users and volumes indicates less demand for ETH.

Data from Web3 data aggregator DappRadar shows that the top Ethereum decentralized applications (DApps) have seen an average 6.42% decrease in the number of active addresses over the last 30 days.

Over the past 30 days, Ethereum DApps experienced a 26.51% drop in transaction volume fueled by decreases in Uniswap, MetaMask Swap, Blur and OpenSea.

Additional data from Coinglass reveals a decline in Ethereums network activity (in specific metrics) over the last 30 days. Daily active addresses on Ethereum have dropped from 622,963 addresses on March 20 to 499,448 on April 10.

Although Ethereum remains the network to beat in the DeFi sector, Solana has recently captured its market share in this segment in terms of on-chain activity fueled by the memecoin frenzy andstablecoin transfer volume.

Besides weakening on-chain metrics, the decreasing likelihood of an Ethereum exchange-traded fund (ETF) being approved by May is adding to ETH's bearish momentum and lack of strength against Bitcoin.

VanEck CEO Jan van Eck is the latest to voice his skepticism regarding the May approval of spot Ether ETFs by the U.S. Securities and Exchange Commission.

In an April 9 interview with CNBC, van Eck said he believes the multibillion-dollar investment companys Ethereum ETF application will probably be rejected. VanEck and Cathie Woods ARK Invest were among the first wealth management firms to file for a spot in Ethereum ETF in the U.S. Both companies are awaiting the SECs final decision on their applications, which is scheduled for May 23 and May 24, respectively.

Van Eck explained the regulatory process, highlighting that the SEC typically provides comments on ETF applications and continuously engages with applicants. However, in the case of Ethereum, there has been a notable silence.

Bloomberg ETF analyst Eric Blachunas, who had earlier held 70% odds of an Ethereum ETF approval by May, is also pessimistic, recently reducing the chances to 35%, saying that the lack of communication from the SEC to issuers could be a bad sign for those hoping for Ether ETF approvals by May.

Fellow analyst James Seyffart also expressed concern over the SECs inaction, questioning the reasons behind the lack of communication when the applications were anticipated.

This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.

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Ethereum price weakens against Bitcoin Here's why - Cointelegraph

Hong Kong has approved spot Bitcoin (BTC) and Ethereum (ETH) ETF (Exchange Traded Fund) applications. The region is the second to do so in 2024, following the SECs (Securities and Exchange Commission) historic decision to approve 11 spot BTC ETFs in the US. However, although the US has approved 11 spot Bitcoin ETFs, the country has yet to greenlight an Ethereum ETF. According to some analysts, a spot ETH ETF could be approved in the US later this year.

JUST IN: Hong Kong approves spot #Bitcoin& Ethereum ETF application.

Also Read: 3 Cryptocurrencies to Buy Before They Hit the Big Post Bitcoin Halving

The approval of spot ETH and BTC ETFs may lead to another rally for the cryptocurrency markets. The US spot BTC ETFs played a significant role in BTC hitting a new all-time high earlier this year. BTC hit $73,737 in early March with a rally fuelled by increased inflows into spot BTC ETFs.

Given that the US spot BTC ETFs were responsible for BTC hitting a new all-time high, there is a high probability that a similar pattern will unfold after the Hong Kong approvals.

According to CoinCodex, Bitcoin (BTC) will reclaim its all-time high later this month. Moreover, the platform anticipates BTC to continue on a bullish trajectory for the next few weeks, predicting it to hit $85,906 on May 13, 2024. Hitting $85,906 from current levels would translate to a growth of about 32%.

On the other hand, CoinCodex anticipates Ethereums (ETH) price to consolidate at around current levels, predicting it to trade at $3242.95 on May 1, 2024.

With Bitcoins (BTC) halving just around the corner, we may witness another massive rally in the crypto market. Both Bitcoin (BTC) and Ethereum (ETH) could hit new all-time highs, fuelled by the Hong Kong spot ETFs and BTCs halving later this month.

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Hong Kong Approves Spot Bitcoin and Ethereum Application - Watcher Guru

A significant trend is emerging in the web 3 industry, which means that the number of adherents not of cryptocurrency, but of a wide variety of crypto projects, is growing.

From the very beginning of their creation, the leaders of the crypto industry, and in particular the Ethereum blockchain platform, operated with a large amounts of money and it seemed that this was quite enough for their lasting and long-term success.

However, the problem of scalability began to manifest itself more and more acutely, and many IT companies and specialists began to think about how they could help Ethereum to minimize it.

It was then that the first signs of solutions related to scalability management began to appear, and the Rollups method rightfully took its destiny place among them.

It should be noted that Rollups provide a safe and targeted scaling solution, as they generate the best features of previous methods, such as L2 and side chains.

It is obvious that a large number of projects based on the Ethereum blockchain network are interested in optimizing problems associated with network throughput, and therefore urgently need not just Rollups solutions, but rollups as a service.

We already know that the Rollup method is aimed at optimizing the throughput of the Ethereum blockchain network, and when using it, transactions are performed on the external chain (L2) outside the main network (L1).

At the same time, the data on the results of transactions is managed by smart contracts and placed on L1. The result of this approach is a short transaction time, as well as low fees for them.

Another advantage of this approach is the fact that if something unexpected happens to L2, it will not have a negative impact on the contents of the blockchain, since smart contracts with transaction data are located on the main network.

The Rollups family includes two types: Optimistic Rollups and ZK-Rollups. Speaking about the fact that the Rollup solution should ensure not only the scalability of the blockchain network, but also its security, it should be noted how each of the two types of Rollups implement the security function.

Optimistic Rollups do not verify every transaction at the second level, since the network by default optimistically assumes that every transaction is correct, provided that no one disputes this.

Therefore, calculations only occur if problems arise and when fraud is proven. In addition to implementing its core principle, Optimistic Rollups offer a 100x increase in network scalability.

Unlike Optimistic Rollups, ZK-Rollups aggregate hundreds of off-chain transactions and generate a zero-knowledge mathematical proof of their authenticity.

This approach guarantees a high level of privacy, especially in public blockchain networks. In traditional blockchain operation, security is ensured by the fact that each network participant performs calculations and operations that are provided for by the blockchain protocols.

If the calculation results of the majority of participants coincide with each other, then such a network is safe and trusted. In other words, this situation is called a blockchain network consensus has been reached.

With the ZK-Rollups solution, there is no need to carry out calculations for each network participant, spending a large amount of time and resources.

By delegating this work to one network participant, all of them receive a mathematically provable statement of the correctness of the transactions while maintaining absolute privacy.

It should be noted that Rollup technology has several disadvantages, and one of them is the low level of compatibility of some smart contracts.

Composability is a weak point of Rollups, because if a transaction using multiple protocols is to be processed, it is necessary that these protocols reside on the same Rollup.

The bottleneck of Rollups is also considered to be that they provoke unstable liquidity of the Ethereum network, and this, in turn, leads to worse execution of transactions.

Despite the fact that developers are actively working on eliminating the shortcomings of Rollups, a considerable number of skeptics claim that some Rollups solutions may eventually turn into a kind of Fata Morgana of the Ethereum blockchain.

However, the creators of Ethereum do not share this point of view. They are full of optimism and believe that Rollup technology and, in particular, solutions related to ZK-Rollups, are the best answer to the challenges associated with the scalability and security of the blockchain ecosystem.

And devoted adherents of ZK-Rollups even position this solution as absolutely magical, which can change the rules of the game of the entire crypto industry.

There is also a lot of controversy about the assertion of some experts that Rollups can be hostile towards side chains and will gradually push them out of the blockchain.

Of course, there are some grounds for such statements, but most experts still believe that both Rollups and side chains will occupy their own niches and not come into conflict with each other.

Rollup technology, particularly Optimistic and ZK-Rollups, offers promising solutions to the scalability and security challenges of the Ethereum blockchain.

While there are concerns about smart contract compatibility and liquidity, the ongoing development and optimism surrounding these technologies suggest a transformative potential for enhancing blockchain efficiency and functionality.

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Rollups - Technology for Ethereum The Rolla Daily News - - The Rolla Daily News