Ethereum could surpass Bitcoin by 2024, according to ETC Group head of research. André Dragosch said: The potential for a reversal of ether’s relative underperformance compared to Bitcoin in 2023 will be driven by technological advancements and Ethereum’s position as a leading smart contract platform.
“Ethereum has underperformed Bitcoin over the past 12 months, but I think Ethereum could outperform Bitcoin over the next 12 months,” Dragosch told The Block.
Ethereum price rises
In a recent ETC Group report: In a message to The Block, Dragosch pointed to the deflationary “burn mechanism” being introduced along with other factors that could drive the price of Ethereum higher. Ethereum ETH
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This is improvement proposal EIP-1559, August 2021.
Dragosch added that this decline in Ethereum supply, combined with the attractiveness of ETH staking yields, could cause the second-largest digital asset by market capitalization to surpass Bitcoin. “Ethereum’s net supply is currently burning at about 1.84% per year, which amounts to a negative 1.1% per year. Traditional investors can think of the staking yield as a kind of stock dividend, while the burn rate can be thought of as a share buyback. “Give way,” he said.
Despite these dynamics pointing to a rise in the price of ether, Holborn COO David Schwed told The Block that “Bitcoin’s entrenched role and stability puts it in a position to potentially outperform ether in the long term.”
In 2024, Ether will ‘return to the mean’
“The 12-month relative performance of Ether and Bitcoin has historically shown a strong trend indicating a comeback,” Dragosch added. He said it is likely that Ethereum will return to its average relative return against Bitcoin, noting that with the exception of 2023, Ethereum has consistently outperformed Bitcoin since its launch in July 2015.
Coinbase’s Cryptocurrency Market Outlook report also outlines expectations that Bitcoin’s performance compared to Ethereum will undergo mean reversion in 2024. “We believe Ethereum’s relative discount could foreshadow a mean reversion in 2024,” the Coinbase report said.
However, the report adds that the Ethereum network’s weaker fundamentals have so far limited meaningful price corrections.
“Through the end of November, Ethereum’s total trading revenue was down 29% compared to the same 11-month period in 2022, which is also creating inconsistent monthly Ether supply deflation due to inconsistencies in on-chain activity,” Coinbase reports. It was revealed. Added.
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