Ethereum Outperforms Bitcoin, Boosted by Proof-of-Stake Switch
Ethereum surpasses Bitcoin: What’s behind it?
Over the past seven days, Ethereum (ETH) has put on an impressive performance, significantly outpacing Bitcoin (BTC) in terms of value increase. The second-largest cryptocurrency by market value was able to increase by 16% during this time, surpassing the $2,900 mark for the first time in almost two years. In comparison, the Bitcoin price rose by a comparatively modest 8.5% to $52,300, as data from CoinDesk shows.
Why Ethereum is outperforming Bitcoin
Greg Magadini, Director of Derivatives at Amberdata, sees the reason for Ethereum’s outperformance in the fundamental data of the cryptocurrency. Unlike Bitcoin, whose supply is only growing slower due to the upcoming “halving”, Ethereum has seen an active reduction in supply since switching to the Proof-of-Stake consensus mechanism in September 2022.
Ethereum burning leads to supply shrinkage
Since the switch to Proof-of-Stake, also known as “The Merge”, 1,047,643 ETH have been issued and 1,407,200 ETH have been burned, i.e. removed from circulation. This has led to a net reduction in the ETH supply of 359,557 ETH or 0.209% year-on-year, as reported by the data tracking website Ultrasound.money. During the same period, the Bitcoin supply increased by 1.71%.
ETH staking and ETFs could further reduce supply
In addition to reducing supply by burning Ethereum, staking also contributes to scarcity. Here, ETH is deposited into the network to participate in the consensus mechanism and secure the blockchain. The number of ETH deposited into the network exceeded the 30.1 million mark earlier this month, representing 25% of the total circulating supply.
In addition, soon-to-be approved Ethereum ETFs in the US could further reduce supply by putting ETH into cold storage. Several major financial firms, including Franklin Templeton, BlackRock, Fidelity, Ark and 21Shares, Grayscale, VanEck, Invesco and Galaxy, and Hashdex, have already applied to set up such an ETF.
Conclusion
The combination of supply shrinkage through burning and staking, as well as the potential introduction of Ethereum ETFs, makes the fundamental data for Ethereum look extremely positive. It remains to be seen whether Ethereum can continue its outperformance against Bitcoin.
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Sources: Amberdata, CoinDesk, Ultrasound.money
| Symbol | ETH |
| Coin type | Alt Coin |
| Transaction Speed | Medium |
| Pros |
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| Cons |
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| Price | $3,112.35 |
| 24h % | -2.24 % |
| 7d % | -4.83 % |
| 30d % | 15.05 % |
| 60d % | 21.57 % |
| 1y % | 58.29 % |
| Market Cap | $375,625,365,729.00 |
| Official Links | Website | Source Code |
| Socials | Reddit | X |
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