Can Ethereum really overtake Bitcoin?

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Bitcoin, Ethereum and the entire crypto market are prone to price fluctuations. Crypto investors must therefore carefully monitor market movements to avoid heavy losses when prices are low. The crypto bear market could also be an opportunity for long-term investors to take advantage of low prices and buy assets to sell again during the bull run.

However, the losses of recent months have been almost unbearable for investors. Factors such as rising interest rates and inflation add to the problems. However, the crypto market has seen some relief over the past week as several assets have seen massive price rallies.

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Assets that have performed well include Ethereum. That has gained more than 9% in the past seven days. Ethereum’s performance brought the total crypto market cap back to the $1 trillion mark.

Three Factors in Ethereum Performance

The rally began on October 25, when Ethereum gained 17%, Bitcoin only 6% over the same period. Why did Ethereum fare so well against Bitcoin?

Grayscale, a wealth manager for institutional investors, points out: The level of supply of Ethereum after The Merge may affect the performance of the asset. The ETH supply was very high before the upgrade. However, after The Merge, ETH output dropped to around 14,000 ETH per day and less than 5 million per year.

Additionally, like BTC miners, Ethereum miners had to sell coins to cover their expenses during the long crypto winter. However, the situation improved after the proof switch, which eased the selling pressure. Grayscale’s November report shows: Reduced selling pressure has exposed ETH price to more positive bullish movement.

Ultrasound Money also reports that Ethereum supply growth is down to just 0.09% per year. The supply of ETH has changed to deflationary growth several times over the past few weeks. This happened as demand for ETH on the network increased – resulting in more tokens being burned than produced. In theory, ETH’s appeal as a long-term asset has increased.

Energy Consumption and Price Outlook: Ether vs. Bitcoin

Additionally, The Merge allegedly reduced Ethereum’s energy consumption by 99.9%. This makes ETH more attractive to environmentally, socially and governance-conscious institutions.

The “Digiconomist Ethereum Energy Consumption Index” shows: Energy consumption has dropped from 84 TW/h per year to 0.01 TW/h after The Merge. The factors listed make Ethereum attractive to many investors – although there are also critical voices who doubt its environmental friendliness.

Ethereum is currently trading at $1,552. The price rose to $1,645 on October 29, the highest level since mid-September. However, it failed to add to the momentum, with ETH still down 67.6% from its November 2021 all-time high.

These key factors could push Ethereum to outperform Bitcoin

The price of Ethereum rises above $1,500 on the l ETHUSDT chart on Tradingview.com

ETH is up 24% in the past month but is still trading in the same range as it has been since May. This figure is slightly better than Bitcoin’s price decline.

Bitcoin has fallen more than 70% from its all-time high in November 2021. Bitcoin is currently trading at $20,300. Its market dominance now stands at 38.77% with a total capitalization of $393 billion.

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