ethereum price broke through the $3.9500 barrier again on February 22, while bitcoin price rally struggles to gain momentum: 3 vital market metrics suggest eth could further extend its lead over btc in the coming weeks.
ethereum (eth) and bitcoin (btc) are historically closely correlated, but in 2024, eth appears to have taken the lead. A deep dive into on-chain data trends and expert analysis provides key insights into which asset would stand out as the year progresses.
Is ethereum better than bitcoin in 2024?
So far in 2024, ethereum and bitcoin, the two largest assets in the crypto sector, have attracted billions of dollars in capital inflows. In March 2024, btc is trading at all-time highs of $71,200, while eth price attempts to establish steady support above the $4,000 milestone.
However, a closer look at the price charts shows that eth currently has the upper hand, having outperformed btc by 7% in terms of year-to-date performance.
The chart above shows that the price of eth increased by 79% between January 1 and March 11, 2024, which is significantly higher than bitcoin's 72% price increase.
However, while eth currently has the advantage, to determine which asset has better value for money in 2024, it is important to examine the market catalyst driving both assets.
Firstly, it is important to note that both assets are driven by separate narratives and market catalysts in 2024.
For ethereum, ongoing eth ETF filings, liquidity staking derivatives, Eigen layer replenishment, and Dencun upgrade have emerged major themes within the ecosystem in Q1 2024. Meanwhile, the dominant themes for bitcoin are the rapidly growing demand for the 10 new approved btc ETFs and the next halving event scheduled for April 19, 2024.
These key events have triggered various changes in on-chain transaction trends and investment patterns in both ecosystems, leading to the price of ethereum surpassing that of bitcoin.
3 reasons why ethereum price could surpass bitcoin in 2024
The US Securities and Exchange Commission (SEC) approved 10 new bitcoin ETFs on January 11, 2024, marking a true milestone for the cryptocurrency sector. In the two months after launch, the ETFs rapidly acquired around 800,000 btc, approximately 4.2% of the total circulating supply.
Evidently, the price of bitcoin has benefited greatly from the record inflows by corporate institutional investors in 2024. But interestingly, the ETF's dominance has sparked a skittish reaction among retail btc investors, largely in response to the apparent advance. of the growth of the ethereum ecosystem.
The Santiment Total Holders metric estimates the total number of active or funded wallet addresses that currently exist on a blockchain network. It serves as an indicator to measure the level of adoption among retail investors and mass markets.
In the last 50 days, since January 21, the ethereum network has attracted 3.59 million new holder addresses, while 200,000 btc addresses emptied their wallets and left the network.
This rare on-chain trend suggests that mass retail markets are overwhelmingly behind bitcoin. As bitcoin becomes more concentrated in the hands of fewer whale investors and corporate entities, the btc price is at risk of market manipulation and external shock from macroeconomic fronts.
The significant increase in new holder addresses on the ethereum network compared to the number of btc addresses emptying their wallets suggests a divergence in retail investor sentiment between the two cryptocurrencies.
Firstly, this trend indicates that retail investors are increasingly favoring ethereum over bitcoin, potentially due to ethereum's promise of profit optimization and passive income from its low-risk staking performance for its entourage of applications. decentralized finance companies (DApps).
Furthermore, the increasing dominance of institutional investors and corporate entities in the bitcoin market introduces a new layer of uncertainty and potential risk. While institutional adoption has been a key driver of bitcoin's recent price rally, it also increases the market's susceptibility to large-scale sell-offs or coordinated trading strategies by these influential players.
In the event of a trading market slowdown or changes in macroeconomic policy, concentrated ownership of bitcoin in the hands of highly sensitive Wall Street players could exacerbate btc price declines and lead to increased market volatility.
The divergence in the current trading disposition of bitcoin miners and ethereum node validators is another vital market catalyst that could push the price of eth even further ahead of that of btc. On the bitcoin network, miners dedicate computing resources to validate transactions and secure the network in exchange for btc block rewards. ethereum, since its transition to Proof of Stake (PoS), now relies on its node validators for that critical function.
At the next bitcoin halving event, scheduled for April 19, miner rewards will be reduced from 6.25 btc to 3.13 btc. Now with less than 40 days until the event, bitcoin miners have gone into a selling frenzy in a bid to cash out before the halving date.
As of December 29, 2023, bitcoin miners held a total of 1.96 million btc. But as the halving date approached, miners quickly dumped 300,000 btc, reducing their balances to just 1.93 million btc at press time on March 11, 2024.
Valued at current prices of $71,200, miners sold $21.5 billion worth of btc in the first quarter of 2024 before the halving.
If the bitcoin miner selling trend persists, it could curb the btc price rally, especially compared to ethereum, whose node validators have been accumulating more coins in recent months.
ethereum node validators have doubled down on their bullish positions, depositing 2.4 million eth worth $9.7 billion into beacon chain staking contracts since January 2024, meanwhile, bitcoin miners entered in a sales spree of $21.5 billion.
At press time on March 11, total staking deposits on the eth 2.0 beacon chain stood at $1.4 million eth, an increase of $2.4 million ($9.7 billion). ) in 2024.
Unlike bitcoin miners, ethereum node validators continue to double down on their long-term bullish positions as the eth price further surpasses the $4,000 mark. Positive speculation surrounding the Dencun upgrade and the progress of eth ETF filings are key catalysts fueling the bullish disposition of eth stakeholders.
With these catalysts still in play, eth could see even more coins exit circulation, while the circulating supply of btc increases as miners increase selling pressure as the drawdown nears. half.
VanEck Head of Digital Assets for Cryptoquant also echoed this stance in a recent interview with Cryptoquant.
“In the medium term, eth tends to outperform btc in the halving year, right? That's why I don't want to lose the forest for the trees. I don't think there will be any changes, but I do believe that when the year (2024) is said and done, eth will have surpassed btc.
If these scenarios play out as predicted, eth price will likely widen its lead over btc in the coming weeks.
- Technical Indicators Highlight ethereum's Path Toward $5,000
In short, ethereum is expected to attract greater retail market demand than bitcoin and also see a temporary decline in circulating supply amid rising staking deposits. These key factors put eth price on track for new all-time highs above $5,000.
eth is currently trading above the $4,030 range at the time of writing on March 11. IntoTheBlock's money-in/money-out chart shows that ethereum has a relatively clear path to a new all-time high.
As seen below, the chart highlights the $4,500 territory as the major resistance cluster above current prices. In that range, 617,760 addresses had purchased 1.6 million eth at an average price of $4,557.
Considering they have been holding losses for 3 years, many of those holders could close their positions once ethereum prices approach their breakeven point.
If eth price can establish a steady support level above that $4,500 zone, it could push eth price to a new all-time high above $5,000.
