Bitcoin and ether once rose and fell in near lockstep, but no more.

Though the prices of the two largest cryptocurrencies by market value have both climbed in 2023, they have taken somewhat different paths, with BTC skyrocketing 145% year-to-date and ether jumping a still strong but lesser 85%.

On Monday, bitcoin cracked the $42,000 threshold for the first time since early April 2022 when the Terra ecosystem started to collapse, while ether rose above $2,200 for the first time since May 2022, according to Coinmarketcap data. BTC was recently trading at about $41,950, roughly flat over the past 24 hours.

Read more: 12 Charts That Tell the Story of Crypto in 2023

In its newsletter on Monday, Kaiko Research, which tracks crypto market data, attributed the gap in no small part to rising optimism that the Securities and Exchange Commission (SEC) would approve applications for long elusive spot bitcoin ETFs.

Kaiko noted that BTC volatility has declined significantly since the summer not long after BlackRock, the world’s largest asset manager, and other financial powerhouses submitted their spot bitcoin ETF applications. The firm used the Sharpe Ratio, a measure of compensation that investors receive for taking on more risk where a higher ratio equals a better risk-adjusted return. BTC outperformed most traditional assets, including gold, and Ethereum.

Read more: Spot Bitcoin ETFs Record $4.6 Billion First Day Trading Volume

“The difference in risk-adjusted returns can largely be chalked up to BTC’s superior price performance this year. The ratio was about 0.072 at the start of the year and is now 0.053,” Kaiko research analyst Riyad Carey told Unchained in an email. “ETH has likely had a softer rally because the main catalyst/narrative – a potential spot BTC ETF – directly relates to BTC.”

Bitcoin, which has a market capitalization of $812 billion compared to the $267 billion for Ethereum, is often hailed as “digital gold” and viewed as a hedge against inflation and economic uncertainty. As a result, bitcoin’s price has tended to be more sensitive to global economic factors and policy changes such as Federal Reserve Chair Jerome Powell’s comments last week that another interest rate hike wasn’t currently in discussion – a favorable sign for the asset.

Spot ETF Applications Favor BTC 

Thirteen companies have filed spot bitcoin ETF applications, including Grayscale, which hopes to turn its bitcoin trust into an ETF. The SEC’s thinking on the Grayscale situation remains unclear and could delay that potential product’s approval, although in an interview with Unchained, Bloomberg analyst James Seyffart reiterated his belief that he expects the SEC to approve the applications en masse between Jan. 8 and 10.

The SEC is currently considering seven applications for spot Ethereum ETFs. While a BlackRock application last month caused ETH to have a stronger rally than BTC, there’s general sentiment that bitcoin has an easier road to approval. This is partly because bitcoin is older, has a larger market capitalization and has a more straightforward use case. Ethereum, in contrast, is a more complex platform for decentralized applications (dapps).

On Monday, BlackRock and Bitwise filed amendments to their applications, a further indication of progress, Seyffart wrote.

Meanwhile, another measure of crypto market optimism continued to point upward as inflows to digital asset investment products rose for a 10th consecutive week, according to research group CoinShares. The rise underscores institutional investors’ interest in the asset.

CoinShares data showed that bitcoin had $133 million in inflows last week, bringing its year-to-date total to $1.68 billion. But the group also found that Ethereum had just $31 million of inflows over the same period, bringing its net flows into the positive for the first time this year.

In an email to Unchained, Markus Levin, co-founder of XYO Network, echoed Carey’s comments. “Bitcoin has outperformed Ethereum in large part because many are anticipating that these spot BTC ETFs will likely get approved fairly soon,” Levin wrote. “An ETH ETF might also be on the horizon, though it’s less definitive than the Bitcoin ETFs. As a result, I think we’re seeing a lot of capital getting allocated to Bitcoin and this, in turn, is having an outsize impact on momentum.”