Reference source:W. E. Messamore
Author | Golem (@web3_golem)
In this bull market, the price of BTC has far outpaced that of ETH. To date, BTC has accumulated a 133% year-to-date gain, while ETH has only 50%. Some in the community have joked, "When BTC was at $52,000, ETH was breaking $3,300; when BTC was at $72,000, ETH was still breaking $3,300; now that BTC is breaking $10,000, ETH has finally broken $3,300."
Apart from BTC, the prices of the public chain tokens known as "Ethereum killers" have also outpaced ETH. According to OKX data, over the past month, SUI has risen 74%, SOL has risen 50%, and DOT has risen 131%. Although ETH's price reached $3,500 last Saturday, some investors still feel pessimistic about its prospects of reaching $4,000 in this bull cycle.
Greg Magadini, the derivatives trading director at Amberdata, said in a report to clients that "due to the value proposition of ETH as a 'stable currency', it is facing serious upward resistance, and Ethereum is turning to inflation, with almost all DeFi transactions being executed on L2, which I believe is significantly dragging down the ETH price."
So, as the second-largest blockchain in the crypto industry, will Ethereum's performance in this cycle really lag behind BTC and other "Ethereum killers" as many have said? It may be too early to draw conclusions now, the evolution of mainstream blockchains is an extremely long game - anyone who thinks they have already won the war will become complacent and ultimately lose everything.
However, the following clues suggest that Ethereum may be gathering momentum to "counterattack" and break through $4,000 soon.
ETH/BTC Exchange Rate Turns Again
From a technical perspective, the price exchange rate between ETH and BTC is at a cyclical turning point and has formed a bottom. Based on past experience, this means that the price of Ethereum may rise soon, and the increase may even exceed that of Bitcoin.
Legendary commodity and forex trader Peter Brandt posted on the X platform on November 21 with the title "A letter from the grave?", accompanied by a chart of the Ethereum price and Bitcoin exchange rate. As shown in the figure, the chart shows the rise of ETH when the ETH/BTC exchange rate was at a low point 4 years ago.
ETH Vs SOL
Over a relatively long period of time, during Ethereum's dormancy, Solana has gone through a strong bull market, and from the perspective of sector rotation, this may also mean that Ethereum's market still has more upside potential.
During the US election, comparing the relative performance of the three most popular Meme coins on the ETH and Ethereum chains with the three most popular Meme coins on the SOL and Solana chains is another important signal indicator for evaluating the altcoin market with competitive relationships.
Within the 30 days up to November 25, SOL outperformed ETH with a 50% gain compared to ETH's 34% gain, but the top three Meme coins (SHIB, PEPE, FLOKI) on Ethereum still outperformed the Solana Meme coins (Bonk, WIF, POPCAT) during the same period.
The cumulative 30-day return on investment for Ethereum plus its top three Meme coins was 220%, while the return for Solana plus its top three Meme coins was 200%.
Institutional Support for Ethereum
In addition to the increase in monthly Ethereum ETF net inflows and Ether futures trading volume in November, institutional investors have shown very high confidence in ETH's performance. Institutional investors are not only holding ETH in the short term, they have also locked it instaking contracts, which not only protects the network and is a means of earning additional income, but alsodemonstrates the confidence of institutional investors in Ethereum and its long-term growth prospects.
In early October, Flipside Crypto's data scientist Carlos Mercado pointed out that the number of Ethereum stakers has grown by more than 30% in the past 12 months. In mid-October, New York-based blockchain intelligence firm Blockworks Research released a survey of Ethereum users, which showed that 69.2% of respondents were staking Ethereum, with 78.8% being investment firms or asset management companies.
Furthermore, institutional investors are taking other measures to maintain liquidity while staking ETH, with the report indicating that over 52% of respondents are participating in liquidity staking. This suggests that these traditional financial participants are becoming more mature in the Ethereum DeFi ecosystem.
Bloomberg senior ETF analyst Eric Balchunas also wrote that since Trump's victory, Ethereum ETFs have emerged from the capital outflow abyss and finally welcomed fresh air and net inflows. According to the Bloomberg Intelligence data he presented, the cumulative capital flow of Ethereum ETFs has turned positive, indicating that institutional investors' confidence in Ethereum continues to grow.
DAPP Transaction Volume Grows Monthly
Another fundamental analysis of Ethereum's price is the monthly active users of Web3 or DApps protected by its blockchain network. According to DApp Radar's data, with the ETH/BTC exchange rate reaching a historical turning point and ETF investor sentiment turning bullish, Ethereum's DApp transaction volume is rising, and the calendar span is almost the same as the increase in ETH futures trading volume and ETF inflows.
Over the past 30 days, Ethereum's DApp transaction volume has been far ahead in DeFi tokens. Ethereum's decentralized application layer transaction volume is $150 billion, far exceeding the $32 billion of Arbitrum (ARB) in second place and the $26 billion of BSC (BNB) in third place.
Meanwhile, The Block Pro analysis on November 21 alsopointed out that driven by ETF capital inflows, Bitcoin's rise, and post-election bullish sentiment, Ethereum's daily on-chain transaction volume surged to $7.13 billion, the highest level of the year, growing 85% in just two weeks.
Ethereum Price Forecast: Reach $6,000 by 2025?
Crypto analyst Ali Martinez predicted on November 20 that by the end of this macroeconomic cycle, ETH will outperform BTC. In his optimistic forecast for the coming months, he believes Ethereum will rise to $6,000, and also expects Ethereum to reach at least $4,000 in this cycle.
And he said: "Every market cycle goes through a stage where Ethereum outperforms Bitcoin, which hasn't happened in the current cycle yet, but is sure to happen soon. Since ETH is still lagging, there is an opportunity to buy in before it outperforms the market."
NDV co-founder Christian 2022.eth also wrote that "since October, I have gradually built up more than $8 million in BNB, believing that BNB and ETH will catch up and lead the market in the second half of the bull market."
