Ether has vastly outperformed bitcoin since both cryptocurrencies bottomed out in June 2022. Ether’s superior gains have come as investors anticipate a major upgrade to the ethereum blockchain dubbed “the merger”.
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Since bottoming out in mid-June, ether has significantly outperformed bitcoin as investors anticipate a major upgrade to the ethereum blockchain.
Bitcoin hit a low of $17,601 on June 19 and has since risen about 31% from Friday’s trading price, according to CoinDesk data.
Ether also hit its recent low on June 19 at $880.93, but has since risen 106%.
The huge difference in performance in the two cryptocurrencies comes down to one key factor: a major upgrade in the ethereal blockchain. Ether is the native cryptocurrency of the ethereum network.
Ethereum’s upgrade, dubbed the “merge,” is scheduled for September 15th after numerous delays. The blockchain is changing from a so-called proof-of-work system to a model called proof-of-stake. A full explanation of the merger can be found here.
Proponents say the move will make the ethereum network faster and more energy efficient.
“The upcoming Ethereum Merge is the biggest story in crypto right now and explains why Ether has left Bitcoin in its wake for the past month,” Antoni Trenchev, co-founder of crypto trading platform Nexo, told CNBC via email.
“A blockchain that presents itself as energy efficient will always capture the imagination of the masses and that is why Ether has the wind in its sails for the Merge, a step towards proof of stake.”
But the recent ether rally, which has doubled in price in two months, has moved quickly.
An analyst said the rally could continue but there could be some resistance around $2,000. Ether traded at $1,814 Friday.
Jacob Joseph, research analyst at data service CryptoCompare, said that without the Federal Open Market Committee meeting scheduled for August and stocks seeing a rebound, “it’s reasonable to believe that Ethereum could still rise as we get closer to the merger.”
“However… $2,000 has proven to be a major resistance for Ether and the asset needs more wind behind its sails to break through that level.”
Joseph added that bitcoin is unlikely to outperform ether in the near term.
According to Trenchev, there are risks to the ether price rally.
“Any further (unlikely) slowdown to mid-September Merge will be a winding down in much of Ether’s 50% rally since mid-July,” he said.
There is always a chance that traders will also take profits on the massive rally, Trenchev said.
“If the Merge is successful, it could turn out to be a ‘buy the rumor, sell the news’ event, given the overwhelming gains we’ve seen in Ether,” Trenchev added.
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