Ether  started the year strongly but began tapering off in mid-March. However, the altcoin began picking up momentum in mid-May amid anticipation of the approval of spot Ether exchange-traded funds (ETFs) in the United States.

Although ETH has trailed Bitcoin  since Jan. 1, it has outperformed the flagship cryptocurrency since spot Ether ETFs received official approval from the Securities and Exchange Commission on May 23.

Since May 15, ETH has surged approximately 30% compared to BTC’s 9% gain in their respective U.S. dollar pairs.

There are three main reasons why ETH has been outperforming BTC throughout the past several days, including a growth in network activity and increased excitement surrounding the launch of spot Ether ETFs.

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ETH trended higher against BTC in the last 10 days

Ether is up 23% over the last 10 days, outperforming Bitcoin and other top layer-1 tokens. BTC’s price has climbed only 2% over the last 30 days, while other top-cap layer-1 tokens, such as BNB Chain’s BNB  and Solana’s SOL , have rallied 3.35% and 1%, respectively, over the same timeframe.

The ETH/BTC ratio began ascending on May 17, reaching a two-week high of $0.05854 on May 23, a 31% increase.

From a technical point of view, the ETH/BTC weekly chart showed a bullish divergence from the relative strength index, suggesting that a “trend reversal had started,” as observed by trader and founder of MN Trading Michaël van de Poppe. This ratio is considered bullish as long as the ratio remains above 0.051.

“ETH is absurdly undervalued,” pseudonymous analyst Plazma declared in a May 31 post on X, adding that the ETH/BTC ratio will hit 0.1 within a few months and “10 ETH will be equal to 1 BTC.”

Increasing on-chain activity underpins Ether’s outperformance

Ethereum’s network activity and scaling solutions contribute to its performance. Data from DappRadar shows a 7.75% increase in transaction volume among top Ethereum decentralized applications (DApps) over the past week, fueled by decreases in Uniswap, Eigenlayer, MetaMask and Banana Gun. The number of unique smart contracts on Ethereum also rose from 37,870 on May 20 to 38,066 on May 31, according to CryptoQuant.

Additional data from CryptoQuant reveals an increase in Ethereum’s network activity over the last seven days.

Spot Ether ETFs may launch in June

Besides strengthening on-chain metrics, the likelihood of Ether ETFs making their market debut soon is adding to ETH’s bullish momentum and increasing strength against Bitcoin.

Bloomberg senior ETF analyst Eric Balchunas believes these investment products have a “legit possibility” of launching by late June after BlackRock updated a key filing necessary for launch.

BlackRock updated its S-1 form for its iShares Ethereum Trust (ETHA) with the SEC nearly a week after the regulator approved its 19b-4 filing.

Blachunas said that another round of filings to “fine tune” SEC comments is likely, but an “end of June launch [is] a legit possibility.” However, he kept his approval odds for around July 4, adding that an earlier approval would be a “long shot.”

Fellow Bloomberg ETF analyst James Seyffart said BlackRock’s updated S-1 is “almost certainly the engagement we were looking for.”

“Issuers and SEC are working toward spot Ethereum ETF launches.”

Market participants are optimistic that spot Ether ETFs will see ETH reach new highs as some speculate Wall Street will use it as a bet on Web3’s growth. Others speculate ETH’s price could hit $10,000 this cycle as institutional capital is rotated into Ether ETFs.