Why Ethereum Is a Better Bet than Bitcoin Right Now
Welcome to another Crypto Weekly Digest brought to you by VirtualBacon.
This week we’ll dive into Bitcoin and Ethereum and think about which holds more promise as we step into 2024. Ethereum experiencing its own share of trials, including a consistent underperformance against Bitcoin and recent asset sales by the Ethereum Foundation. But, is there a chance that right now is actually a super interesting time to start believing more in Ethereum? As we move forward, especially with some news and changes coming up for Bitcoin, we’ll look at facts and charts, and discuss why Ethereum might just be a bigger deal than we think. As always, we'll wrap things up with a glance at market shifts and vital project updates that emerged this week.
Ethereum Market Cap and Dominance
Ethereum is transcending its altcoin status, emerging as a common goods asset, much like Bitcoin. Looking at the market capitalization reveals that Bitcoin holds a dominant position of around 47%, with Ethereum reaching a notable peak of 21% and currently holding steady at 17%. Despite the ebb and flow of these figures, Ethereum clinches its position as the second-largest cryptocurrency, showcasing a significant market cap of $190 billion against Bitcoin’s $530 billion. In bull market peaks, Ethereum has even soared to constitute as much as 40% of Bitcoin.
Looking at Ethereum’s Dominance, it has displayed remarkable stability for approximately two years. While altcoins have witnessed a 33% plunge in market dominance from their pinnacle, Ethereum’s minor dip doesn’t spell calamity. Experiencing a modest decline from a 22% peak to 18%, Ethereum's market resilience and dominance since 2019 signal a steadfast presence in the number two spot of the crypto market.
ETH Market Dominance
Other Altcoins Market Dominance
Ethereum Foundation Selling
In light of recent news, the Ethereum Foundation made a relatively small sale, letting go of 1,700 Ether, equivalent to $2.7 million. While some market participants had concerns, it's crucial to understand the context: this is a modest sale considering the Foundation's substantial holdings and Ethereum's towering market cap of $189 billion.
A glimpse into their selling history in the past three years reveals that not only have more substantial quantities of Ether been sold in the past, but also such sales aren't new or indicative of market peaks.
Essentially, these sales are likely standard practice, potentially to cover operational costs like employee salaries and fund ongoing development, suggesting a business-as-usual scenario for the Foundation.
ETH/BTC and Cycle Trends
Recent discussions around the Ethereum vs Bitcoin (ETH/BTC) chart have raised eyebrows in the crypto community, especially concerning the ETH/BTC ratio, which has witnessed a dip from 0.067 to about 0.056. While some analysts predict a further decline to approximately 0.035, it's essential to contextualize this within broader market cycles.
ETH Following BTC Halving Cycles
Historically, both Bitcoin and Ethereum have shown cyclical behaviors linked to Bitcoin's halving events. Observing a color-coded chart, which adjusts hues based on proximity to the next Bitcoin halving, reveals that advantageous accumulation phases for both assets often align with particular color bands.
ETH/BTC Ratio Following Halving Cycles
Both assets have experienced booms following their respective optimal accumulation periods, hinting that the current state could be more of a temporal dip rather than a drastic downward trajectory. Thus, even amid recent fluctuations, the cyclical nature of Ethereum suggests resilience and potential future uplifts, keeping its substantiality in the market steady.
Ethereum Spot ETF and Commodity Status
In recent developments, the filing of an Ethereum Spot ETF has unfolded, notably with entities like Arc Invest and 21 Shares taking a plunge into the mix, and Grayscale converting their Ethereum Futures ETF into a spot ETF.
https://blockworks.co/news/21shares-ark-filing-for-spot-ether-etf
This strategic move is not just a page from the Bitcoin playbook but signifies a broader institutional acknowledgment and potential adoption of Ethereum, much similar to Bitcoin.
Crucially, regulatory bodies such as the SEC have often referred to Ethereum as a commodity in various legal contexts, similarly to Bitcoin, enhancing its standing and desirability among institutional platforms like PayPal and Robin Hood.
https://cointelegraph.com/news/cftc-declares-ether-as-a-commodity-again-in-court-filing
Therefore, Ethereum not only paves its path in the ETF space but also underpins its status in regulatory spectacles, substantiating its role and solidity in the larger financial picture.
Ethereum's Price Outlook: Can It Outperform Bitcoin?
Diving into Ethereum's potential, it's important to assess its future price relative to Bitcoin's anticipated performance. Historically, I've pegged Bitcoin's late 2025 cycle top around $200,000 based on previous trends. Should this play out, Bitcoin's market cap would soar to around $4 trillion. With this in perspective, and assuming Bitcoin's dominance hovers around 40%, the total crypto market cap might be around $10 trillion.
If Ethereum maintains about 20% of this market dominance, its market cap would be roughly $2 trillion. Considering Ethereum's current supply of 120 million tokens, this places each Ethereum coin at approximately $16,660.
ETH/BTC Ratio Won’t Make New All-Time-High, But CAN Rise 50% from Current Level to Reach 2021 Highs
Comparatively, this suggests Ethereum might rise by around 230% from its 2021 all-time high, while Bitcoin could potentially see a 63% increase. This would mean Ethereum might outperform Bitcoin by about 1.5 times. While this isn't an explosive growth, it’s a significant one, especially when considering the fundamentals applying to both. Furthermore, Ethereum's current value against Bitcoin is promising, making it an attractive investment option in the longer term.
ETH/BTC Technical Analysis
ETH/BTC Ratio is coming down to test the 0.053 Support level that has held for the past 2 years, and also dates back to the 2018 bull run supports. If our thesis is right about ETH not making new lows and continues to hold high market dominance, ETH/BTC ratio should start to rebound slowly from here. It will not be a sharp bounce since this is a weekly timeframe chart that covers the past 6 years, but accumulating ETH at the current level could prove to outperform BTC in the next bull run. My estimated multiple of outperformance stands at about 1.5X for Ethereum versus Bitcoin. Not super high returns, but decently high probability to come true.
Altcoin Market and Project Updates
Now, let's check out the major altcoin gainers and losers from the past week, and catch up on key project updates.
Best Performing Coins of The Week
Worst Performing Coins of The Week
🟠 Arbitrum concludes first STIP voting, allocating 50M ARB tokens as incentives to a wide array of participating projects.
🟠 Blur announces Season 2 of $BLUR airdrop, starting November 20th, distributing 300M+ tokens (~$48.8M) among engaged community members.
https://x.com/blur_io/status/1711419863887925327?s=20
🟠 FriendTech introduces 2FA for extra user account protection; cannot be reset by FriendTech or Privy teams, ensuring heightened security.
https://x.com/friendtech/status/1711520971033903575?s=20
🟠 Uniswap Foundation seeks $46.2M from DAO for 2-year plan: developing Hooks ecosystem, launching scholarships, and expanding v4 adoption.
https://vote.uniswapfoundation.org/proposals/51
🟠 THORSwap resumes trading, introducing new blocks on countries sanctioned by the US and enhancing compliance.
https://decrypt.co/201337/thorchain-soars-over-defi-exchange-lifts-trading-pause
🟠 LayerZero integrates with OpBNB, enabling BNB Chain apps to expand and explore over 40 chains.
https://x.com/LayerZero_Labs/status/1712278979263250608?s=20
🟠 Polygon Labs collaborates with ApeCoin DAO to develop ApeChain, their own zk-L2 blockchain, enhancing transaction privacy and speed.
🟠 MetaMask integrates Stripe for US users, enabling fiat transactions via the mobile app, browser extension, and MetaMask Portfolio through Link.
https://twitter.com/metamask/status/1712157050614972923?s=61
🟠 Scroll, backed by Polychain, Sequoia China, and Bain Capital, prepares to launch its zkEVM Layer 2 mainnet after raising $80M.
https://twitter.com/scroll_zkp/status/1711626060033561012
🟠 Immutable partners with Amazon Web Services, joining its ISV Accelerate Program to enhance blockchain gaming infrastructure solutions.
https://twitter.com/Immutable/status/1711865035612733594
Wrapping up this week, we've delved into Ethereum’s potential to outshine Bitcoin in the future bull market, considering current ratios and crucial support levels. We also explored a short-term trade opportunity around the 1550 price point. Though the cycle according to our discussed charts hints it's a good time to stack Ethereum, it's essential to anticipate a possible 1.5x return and not exponential growth against Bitcoin. A slow, steady ascent might just be on the horizon post-institutional accumulation, and your patience over the next couple of years could be pivotal. Like always, we also checked out the biggest winners and losers in the altcoin world, plus all the must-know project updates from the last week.
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