While bitcoin and cryptocurrency's recent momentum is cooling, ethereum (eth) rejects lower lows, especially against bitcoin (btc). Leading to X on December 8, decentralized finance (DeFi) researcher DefiIgnas shared ideas that suggest eth could be on the verge of a rally that would potentially see the second most valuable coin usurp btc's current position as the best-performing asset.
Reasons that could boost ethereum bulls
The researcher noted that eth is down 24% against btc in 2023. However, multiple fundamental indicators show that this is about to change. First, DefiIgnas noted that cryptocurrency investors are increasingly attracted to the discounted Grayscale ethereum Trust (GETH), which has been rallying in recent months, outperforming ethereum spot prices.
GETH is up 298% in the past few months, while eth is only up around 100% in the same period. As GETH stock prices increased, its discount to spot eth decreased. This means that more capital indirectly flowed into eth, leading to greater demand.
In addition to the rise of GETH, the researcher remains bullish on ethereum due to the recent developments surrounding the approval of the first bitcoin spot ETF. The crypto community expects the Securities and Exchange Commission (SEC) to authorize multiple products, including those proposed by Fidelity and BlackRock.
In DefiIgnas' assessment, once the bitcoin spot ETF goes live, likely in early 2024, all “attention, narrative and speculation” will shift to the agency approving the first ethereum spot ETF. BlackRock, the world's largest asset manager, has already filed an application with the SEC to issue the first ethereum spot ETF.
The expected activation of the Cancun upgrade in the first half of 2024 will also likely support ethereum prices. Over the years, ethereum has integrated multiple upgrades. This includes moving from proof-of-work (PoW) to proof-of-stake (PoS) and overhauling its fee auction mechanism, introducing eth burning.
However, with Cancun, the goal is to directly improve core grid capabilities by activating several proposals, including proto-dank sharding EIP-4844, which aims to reduce gas fees associated with buildups. This upgrade will further cement ethereum's quest to significantly increase on-chain scalability and reduce gas fees over the years.
eth looks firm, resistance at November highs
At spot rates, eth is firm against btc, looking at the arrangement of the candles on the daily chart. It remains to be seen how prices will react in the coming days.
Still, if the December 7 gains are confirmed, eth could extend the gains. In that case, it may surpass the current consolidation as the bulls aim to surpass the November 2023 highs of around 0.058 btc.
Featured image from Canva, TradingView chart
