Ethereum over $2,900, supply outlook better than Bitcoin: Analyst | CoinDesk JAPAN

• Over the past seven days, Ethereum has outpaced Bitcoin's rise.
• Ethereum's fundamentals appear to be more constructive than Bitcoin's, as Ethereum's supply is deflationary.

Ethereum (ETH) has outpaced Bitcoin (BTC) gains over the past week. Ethereum appears to have better fundamentals than Bitcoin, so this trend could continue, said Amberdata's director of derivatives.greg– Pointed out by Greg Magadini.

Outperforming Bitcoin

According to data from CoinDesk, Ethereum rose more than 16% in seven days and remained above $2,900 (approximately 435,000 yen, equivalent to 150 yen to the dollar) for the first time in nearly two years. Bitcoin prices, on the other hand, rose more slowly, rising 8.5% to $52,300. The Ethereum/Bitcoin ratio rose nearly 7% to 0.055. The CoinDesk 20, which measures the performance of the entire crypto market, rose 10.7%.

Ethereum has been lagging behind Bitcoin for weeks, as traders focused on the launch of a Bitcoin spot ETF in the US and the impending halving, but now Ethereum has reversed its performance. did.

Focus may shift to decreasing supply

Ethereum was moving to a proof-of-stake (PoS) consensus mechanism in September 2022 in an upgrade called “The Merge,” so the focus could soon shift to a significant decline in Ethereum supply. Magadini pointed out. This is in contrast to Bitcoin's halving, which only slows the rate of supply growth.

“Everyone is talking about the Bitcoin halving in April, but that is nothing compared to the active 'curtailment' of Ethereum supply that has already been happening since September 2022,” Magadini wrote in his weekly newsletter. “The next opportunity is Ethereum! Demand is rising due to the low Ethereum/Bitcoin ratio, and (Ethereum's) fundamental supply situation is better than Bitcoin.”

Since The Merge, 1,047,643 ETH (worth $3.05 billion) has been issued and 1,407,200 ETH has been burned or removed from circulation, representing a net supply of 0.209% year-on-year, according to data tracking website Ultrasound.money. decreased by 359,557 ETH. Bitcoin supply increased by 1.71% during the same period.

This decline is indicative of a deflationary trend due to the Ethereum blockchain burning some of the transaction fees paid to validators. The Merge replaced miners with validators, significantly reducing the Ethereum supply.

Validators participate in the PoS process by staking a minimum of 32 ETH. Ethereum staked on the network exceeded 30.1 million ETH earlier this month, accounting for 25% of the total circulating supply. An upgrade to Dencun scheduled for March is expected to reduce transaction costs.

Possibility of Ethereum ETF approval

Furthermore, the US Securities and Exchange Commission (SEC) is expected to approve a US physical Ethereum ETF this year. Franklin Templeton, BlackRock, Fidelity, Ark and 21Shares, Grayscale, VanEck, Invesco and Galaxy , Hashdex has filed an application for an Ethereum spot ETF.

The SEC approved multiple Bitcoin spot ETFs last month, paving the way for investors to have exposure to Bitcoin without owning or storing the coins. Since its launch on January 11th, the ETF has seen approximately $5 billion in inflows, raising expectations about the potential of the Ethereum ETF.

“When you combine this Ethereum 'supply burn' with dormant staked Ethereum and mix it into a physical ETF that actively puts Ethereum into cold storage…all of a sudden, the story around Ethereum's supply is driven by fundamental factors,” Magadini said. I’m going to be bullish,” he said.

｜Translation and editing: Rinan Hayashi
｜Image: CoinDesk Indices
｜Original text: Ether's Fundamental Supply Outlook Better Than Bitcoin's, Analyst Says as ETH Tops $2.9K