Ethereum (ETH), the second largest cryptocurrency by market capitalization, has overtaken bitcoin in terms of growth over the past week. This trend may continue, as the fundamentals of Ethereum look more attractive than those of bitcoin, writes CoinDesk with reference to Greg Magadini, director of derivatives at Amberdata, a company specializing in the analysis of information about digital assets.
Ethereum has risen in price by more than 16% over the past seven days and has risen above $2,900 for the first time in almost two years, while the price of bitcoin has increased by 8.5%, reaching $52,300. The ratio of the price of ether to the value of bitcoin increased by almost 7%, reaching the level of 0.055.
Following the launch of the bitcoin ETF, several leading asset managers applied to create spot exchange-traded funds on Ethereum. Among the applicants are the world's largest investment company BlackRock, the American investment fund Franklin Templeton, which manages $1.5 trillion in assets, and other companies in the traditional financial sector. The deadline for making a decision on the final approval of applications for a spot ETF for Ethereum falls on May 23.
The declining supply of Ethereum on the market since September 2022, high demand and a favorable fundamental picture make ETH a promising cryptocurrency. This is due to the introduction of a deflationary model into its market offering, as noted by CoinDesk.
As a result of combining the processes of "burning" Ethereum and its staking, as well as the launch of the Ethereum-ETF, with the transfer of the second cryptocurrency to cold wallets for storage, the dynamics of the Ethereum price becomes "bullish", fully consistent with fundamental indicators, Magadini noted.
After the implementation of The Merge update, when Ethereum no longer needed miners and the network switched to the Proof-of-Stake (PoS) algorithm, 1,047,643 ETH (worth $3.05 billion) were issued, while 1,407,200 ETH were burned. This led to a reduction in supply by 359,557 ETH, or 0.209% year-on-year, according to the aggregator Ultrasound Money. At the same time, the supply of bitcoin increased by 1.71% over the same period.
"Ethereum continues to strengthen its position as a leading cryptocurrency through the use of a staking system, eco-friendly design and attractiveness for launching new financial products. These factors make Ethereum a promising candidate for mass institutional adoption," Coindesk writes, citing a report by the Bernstein brokerage company.
Analysts consider the update scheduled for March 2024, called Dencun, to be another factor in the growth of the second cryptocurrency, which should increase the throughput of the Ethereum blockchain to 100 thousand transactions per second and allow the introduction of a new type of transactions that will make second-level solutions for Ethereum even cheaper.
