Ethereum always outperforms Bitcoin, no matter the ETF

Ethereum's remarkable performance against Bitcoin, highlighting the significant yearly and year-to-date gains

In the ever-evolving world of cryptocurrency, Ethereum has taken a monumental leap forward, leaving Bitcoin's performance in its wake. With a staggering 98% annual gain and an additional 42% increase within the first part of the year, Ethereum's bullish run is the talk of the town. Amidst speculations of new Exchange-Traded Funds (ETFs) entering the market, analysts from Bernstein suggest that the real catalyst behind Ethereum's surge is far more fundamental.

Ethereum's shift to a proof-of-stake model in September 2022

September 2022 marked a pivotal moment for Ethereum as it transitioned to a proof-of-stake (PoS) consensus mechanism. This wasn't merely an incremental update; it was a revolutionary shift that positioned ETH on a deflationary path. By reducing the overall supply of ETH, the move to PoS has injected a new level of scarcity and value into Ethereum's ecosystem, capturing the attention of investors worldwide.

How do staking pools, DeFi contracts, and layer-2 networks contribute to the scarcity of ETH?

A striking feature of Ethereum's current landscape is the all-time low of ETH available on exchanges—merely 11%. The bulk of Ethereum's supply is now locked in staking pools, DeFi contracts, and layer-2 networks. This strategic locking away of ETH mimics a scarcity effect, akin to squirreling away nuts for the winter, amplifying demand and pushing prices to new heights.

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Ethereum's Ecosystem Expansion: DeFi, NFTs, and Layer-2 Networks

Ethereum's ecosystem is experiencing explosive growth, fueled by the DeFi boom and the NFT craze. Transaction fees on the Ethereum network are skyrocketing, a testament to the increasing utility and demand for ETH. Furthermore, layer-2 networks are enhancing Ethereum's scalability and cost-effectiveness, making it more appealing for a wide range of applications. The introduction of the Eigen layer is set to bolster this trend, facilitating easier restaking of ETH and exploration of new services.

Focusing on the implications of the Dencun upgrade and its expected reduction in transaction costs

Institutional investors are gravitating towards Ethereum, increasingly favoring it over Bitcoin. Research from Bybit indicates that institutions are allocating a significant portion of their crypto portfolios to ETH, a shift from the previous retail investor trend of diversifying across various altcoins. The upcoming Dencun upgrade, anticipated to slash Ethereum layer-2 transaction costs by up to 90%, is poised to further solidify Ethereum's attractiveness to both institutional and retail investors.

Ethereum is not just outperforming Bitcoin; it is redefining the crypto landscape. With its price currently standing at $3,221 and on an upward trajectory, Ethereum is cementing its position as the future of cryptocurrency. Through strategic technological advancements, reduced supply, and growing institutional interest, Ethereum is proving to be the crypto of choice for those looking to invest in the digital age's gold.