Ethereum's Ether Outshines Bitcoin amidst Uncertain Market Trends
Summary:
Ether, Ethereum's native token, experienced a 20% surge and then a minor correction from January 8 to 16. Despite the uncertainty regarding upcoming events such as the Ethereum spot exchange-traded fund (ETF) and scheduled network upgrades, Ether has outperformed Bitcoin substantially, which is considered unusual. Ethereum network activity and DApp volumes show strength and a potential for increased demand for ETH. Factors such as the imminent "Dencun" hard fork and the expected approval of an Ethereum ETF by May could reinforce Ether's bullish momentum and support the $2,500 price level.
Ether (ETH), the native token of Ethereum, saw a 20% price increase from January 8th to January 11th, but couldn't maintain at $2,600. The succeeding 3.5% decline to $2,560 on January 16th might have let down some optimists, considering that Ether's rate has surpassed Bitcoin's (BTC) by 19.5% starting from January 8th. Such pronounced shifts are rare, with the last notable one taking place in October 2022.
Investors of Ether are pondering whether the $2,500 mark will hold, considering there are no clear upcoming triggers in the immediate future. Notably, investors are awaiting the Ethereum spot exchange-traded fund (ETF) and the scheduled upgrades to the Ethereum network. These developments are viewed as an opportunity for Ether to further distinguish itself from the rest of the cryptocurrency market. However, any delays or failures could pose a risk.
The event of Ether exceeding Bitcoin by 15% or more within a week is unusual. Despite the high correlation between these two cryptocurrencies, disappointment in Ethereum's falling total value locked (TVL) and high gas fees characterized 2023. This development paved the way for rival blockchains, while Bitcoin experienced a lift from the expected approval of a spot ETF, particularly after BlackRock entered the competition in June 2023.
It's noteworthy that Ether's price last escalated drastically from $1,305 to $1,615 seven days before October 29, 2022, surpassing Bitcoin by 17%. However, this gap was closed within 11 days when ETH price fell below $1,100 on November 9, 2022.
Just one instance shouldn't be used as a direct guide for price movements. We must also consider the downfall of the FTX exchange in November 2022 due to alleged mismanagement of customer funds, which led to a potential $8 billion deficit. However, there was a contrasting scenario from July 13, 2022, to August 13, 2022, when Ether's value soared by 63% in comparison to Bitcoin.
Additionally, the Ethereum network's robust activity indicates strength and an increased demand for ETH. Therefore, Ethereum network metrics, including its scalability solutions, should be assessed to determine whether Ether can defend the $2,500 mark.
Over the last month, Ethereum's top decentralized applications (DApps) witnessed a 26% decrease in the number of active addresses on average. Despite this, Ethereum DApps saw a volume increase of 41% in the past 30 days, underpinned by growth in Uniswap, Balancer, ParaSwap, and Aave.
In the view of the strong on-chain activity, Ether's price could also receive a boost from the forthcoming "Dencun" hard fork, a network upgrade aimed at enhancing data availability and decreasing rollup transaction costs. Test implementations of the upgrade are set to start on January 17.
Additionally, Bloomberg ETF analysts predict a 70% chance of an Ethereum ETF getting approved by May, further supporting bullish activity and the resilience of the $2,500 cost support.
This piece does not comprise investment counsel or suggestions. Every investment and trading maneuver carries risk, and readers should carry out their own research before making decisions.
Published At
1/16/2024 11:22:05 PM
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