Ether has made a small advancement over the last week in terms of its performance relative to bitcoin, according to data from CoinShares.

"Over the last week, ether has outperformed bitcoin by about 4.55%," CoinShares Research Associate Luke Nolan told The Block.

However, Nolan added that a closer look at the ETH -3.90% /BTC trading pair shows ether's recent gains are more of a technical bounce than an indication of a pickup of interest in Ethereum itself.

Nolan shared ETH/BTC ratio data with The Block that showed that ether had recently dipped into technical lows against bitcoin that were last seen in June 2022. However, the data revealed ether has bounced back above these lows over the past few days.

ETH/BTC ratio, CoinShares data

zkLink Co-Founder Vince Yang put forward some possible reasons for the recent ether uptick. "The upcoming Cancun upgrade has resulted in increasing interest and demand. We believe the driving factor of ETH is the development of the technology and ecosystem. The demand and the price of ETH will continue to rise, at some point, likely to overturn bitcoin which has no real business use case other than value storage and transaction," Yang told The Block.

Bitcoin dominance posts slight decline

According to CoinShares data, bitcoin dominance peaked at around 54.4% last week and is currently at 52.7%. "This, together with the fact that bitcoin is still sitting at its yearly high of $34,700 to $35,000, suggests that altcoins are performing well with a stagnant bitcoin," Nolan said.

YouHodler Chief of Markets Ruslan Lienkha has also observed indicators that the altcoin market has soaked up some of the capital inflow fueling bitcoin's recent rise. "There is some spillover of bullish sentiment in the market, and the upward trend may continue. Unfortunately, we cannot call the growth sustained just yet, because the macro impacts the market in the long term," Lienkha added.

Lienkha stressed that although ether has had a recent uptick, its reaction over the past weeks is still quite restrained compared to the growth witnessed in the rest of the crypto market. He expressed general concern over ether's market reaction, considering it has such a central position within the entire cryptocurrency ecosystem. "Ether looks weak despite its correlation with the market, and we expected to see ETH at much higher prices, at least at $2,000, due to its important role as the second biggest cryptocurrency in the crypto world," Lienkha told The Block.

The YouHodler chief of markets advised investors to pay close attention to how the U.S. Federal Reserve will direct its monetary policy at the next Federal Reserve Open Market meeting. "The economic data from the U.S. and the next Fed meeting will affect and adjust all markets' sentiment. So, the current situation is slightly different from previous crypto bull runs, as the crypto market was more isolated from TradFi before," Lienkha added.

The next FOMC meeting will be held over Dec. 12-13. The Fed held rates steady at 5.25%-5.50% at its November and September 2023 FOMC meetings, which has provided some respite for liquidity-starved equity markets.