Why can ETH underperform BTC in a short time?


Ether could take well over 12 months to regain ground against Bitcoin thanks to the greater uncertainty surrounding the switch to ETH 2.0 and institutional investors' reservations.

The cost of Ether (ETH) exceeded that of Bitcoin (BTC) by 170% between March 28 and May 15. The impressive bull run saw the token reach an all-time high of USD 4,380.

However, once the cryptocurrency markets began an intense downturn on May 12, the trend began to reverse and, thereafter, Ether has underperformed by 25% comparatively to Bitcoin.

Certain might mention that this is a technical adjustment after a deep rally. While this partially explains the shift, it excludes certain key components, including the rapid development of capable contract network participants and the adoption of Bitcoin as legal tender for the first time.


The interaction between ETH and BTC rallied again on June 8, reaching 0.77 despite the cost of Ether remaining 36% below its all-time high and approaching the USD 2,800 degree.

Ether's bull run potentially gained additional virtue from intense praise from institutional investors. Traders could have sensed a sense of urgency, known as FOMO, and immediately modified their Bitcoin exposure to the market's most enormous altcoin.

Mike Novogratz mentioned: Ethereum could surpass $5,000 this year. Some analysts interpreted this as a guess, but others understood it as a prediction. However, everything mentioned above is possible depending on the overall conditions of the cryptocurrency market.

The universal investment bank believed that Ether had a high chance of overtaking Bitcoin as a dominant cost reserve.

(BSC) Binance Smart Chain controlled more than 35% of the volume of decentralized exchanges.

While Ethereum has maintained its 80% dominance in total cost locked in decentralized finance applications (DeFi), the Binance Smart Chain (BSC) achieved a 40% market collaboration in decentralized exchanges (DEX).

The extraordinary surge in the DeFi industry and non-fungible token (NFT) markets caused deep congestion on the Ethereum network, pushing average commissions to USD 37 around May.

That bottleneck unleashed an exodus of activity to competing networks, and PancakeSwap was in the best position to capture some of that flow. To make matters worse, relevant DeFi projects expanded into the Binance Smart Chain.

Investors were quick to realize that the trend could move forward, as competing capable contract networks provided a simple solution for dApps looking for cheaper alternatives.


No territory is adopting Ethereum chief

Bitcoin might have performed unsatisfactorily in the last 30 days as it failed to break the USD 42,000 resistance after several attempts.

However, it achieved a key milestone once El Salvador has become the first territory to change the cryptocurrency into legal tender on June 12.

After the Central American territory enacted the law, a handful of other Central and South American territories began discussing the benefits of following in the same footsteps.

Ethereum is undergoing a redesign that will change the issuance rate and how entities are paid to defend the network by moving away from the proof-of-work (PoW) model.

As both, Bitcoin ensures that each upgrade is backwards compatible with previous variants and retains its precise monetary policy.

That is the primary reason why Ether will not overtake Bitcoin in 1 year, or at least until there is a better understanding of what the dominance of capable contracts on the Ethereum network will look like.

Authors get paid when people like you upvote their post.
If you enjoyed what you read here, create your account today and start earning FREE STEEM!