While Bitcoin and cryptocurrency momentum has been cooling recently, Ethereum (ETH) is specifically rejecting lower lows against Bitcoin (BTC). Decentralized Finance (DeFi) researcher DefiIgnas chooses X on December 8 shared Insights that suggest ETH could potentially be on the verge of a rally that would see the second most valuable coin unseat BTC as the best performing asset.
Reasons that could boost Ethereum’s strength
The researcher observed that ETH is down 24% compared to BTC in 2023. However, several fundamental indicators show that this will soon change. First, DefiIgnas noted that cryptocurrency investors are increasingly attracted to the discounted Grayscale Ethereum Trust (GETH). GETH has been outperforming the Ethereum spot price over the past few months.
GETH has soared 298% over the past few months, while ETH has only increased about 100% over the same period. As GETH stock price rose, its discount to spot ETH decreased. This indirectly means that more capital will flow into ETH, increasing demand.
Aside from the GETH rise, researchers remain bullish on Ethereum due to recent developments surrounding the approval of the first spot Bitcoin ETF. The cryptocurrency community expects the Securities and Exchange Commission (SEC) to approve several products, including those proposed by Fidelity and BlackRock.
According to DefiIgnas’ assessment, once the spot Bitcoin ETF goes live in early 2024, all the “interest, talk, and speculation” will shift to the institutions approving the first spot Ethereum ETF. BlackRock, the world’s largest asset manager, has already applied to the SEC to issue its first spot Ethereum ETF.
The activation of the Cancun upgrade, expected in the first half of 2024, is also likely to support Ethereum prices. Over the years, Ethereum has incorporated several upgrades. This includes switching from Proof of Work (PoW) to Proof of Stake (PoS), overhauling the fee auction mechanism and introducing ETH burns.
However, Cancun’s goal is to directly improve the functionality of the mainnet by enabling several proposals, including EIP-4844 proto-dank sharding, which aims to reduce gas costs associated with rollups. This update further solidifies Ethereum’s efforts to significantly increase on-chain scalability and lower gas fees over the years.
ETH looks solid and finds resistance at November highs
At spot rates, ETH is firm compared to BTC, looking at the candlestick arrangement on the daily chart. It remains to be seen how prices will react going forward.
Nonetheless, ETH may increase its profits once profits are confirmed on December 7th. In this case, the bulls could look to break above the current consolidation as they aim to break above the November 2023 high of around 0.058 BTC.
Featured image from Canva, chart from TradingView