Ethereum outperforms Bitcoin: speculative buying and price rise looming

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  • Wedge Pattern Leads to Upside Rally for Major Cryptocurrencies
  • He climbs lately faster than him
  • Ethereum 2.0 Proof of Stake
  • Bitcoin continues to have an advantage
  • Bitcoin surges again and Ethereum on track to break November highs

On November 10, 2021, Bitcoin and Ethereum reached all-time highs. After trading at five cents per token in 2010, Bitcoin reached almost $69,000 per token in 2021. In 2016, Ethereum stood at $11.16 and rose to just over $4,865 in 2021.

However, on the day that the major cryptocurrencies reached their highs, both closed below the lows of the previous day, putting the daily charts in a bearish key. Bitcoin and Ethereum tumbled, with Bitcoin hitting lows of $33,075 and Ethereum falling as low as $2,165 in January. The leading cryptocurrency lost around 52.6% of its value, while Ethereum dropped 56%.

However, the top two cryptocurrencies by market capitalization have recovered from the lows in late January. In recent weeks, Ethereum has taken the lead over Bitcoin accelerating more significantly on a percentage basis, although Bitcoin remains the leader, with a market capitalization more than double that of Ethereum.

Wedge Pattern Leads to Upside Rally for Major Cryptocurrencies

Although neither of the two leading cryptocurrencies is rising very much this April 7, they have moved away from consolidation patterns to move a little higher.

Description: Bitcoin Weekly Chart.

Source: CQG

The weekly chart shows that Bitcoin futures have posted lower highs since Nov. 10. After bottoming out on January 24, a pattern of higher lows emerged. Bitcoin broke through its first technical resistance level at an early February 2022 high of $45,905 during the last week of March, interrupting the bearish pattern. Bitcoin is hovering above the $43,400 level at the time of writing on April 7.

Description: Ethereum Weekly Chart.

Description: Ethereum Weekly Chart.

Source: CQG

The weekly chart of Ethereum Next Expiration futures shows the same pattern, breaking the early February highs recorded at $3,292, and breaking the pattern of lower highs. While Bitcoin was hovering around the rally level on April 5th and has since dipped a bit, Ethereum hovered around $160 per token on April 5th, although it has now also dipped.

Ethereum is rising faster than Bitcoin lately

In the first quarter of 2022, they were down just 0.73%, while Ethereum posted a 9.94% loss. The market capitalization of the cryptocurrency asset class fell to $2.084 trillion on March 31 from $2.166 trillion at the end of 2021, down 3.8%. Thus, during the first quarter, Bitcoin outperformed the overall asset class, while Ethereum underperformed.

However, since the lows of January 24, Ethereum has taken the lead. Bitcoin futures hit a low of $32,855 and traded at the $45,950 level on April 5, marking a 39.9% gain. In the same period, Ethereum futures went from $2,158 to $3,459, a rise of 60.3%.

Ethereum 2.0 Proof of Stake

Ethereum is currently launching its version 2.0. Among the updates to the Ethereum ecosystem will be the change from PoW (Proof of Work) protocols to PoS (Proof of Stake).

Bitcoin and Ethereum 1.0 have Proof-of-Work (PoW) protocols that use a competitive validation method to confirm transactions and add new blocks to the blockchain. The PoW protocol tends to be highly power intensive, requiring considerable computing power.

The Proof-of-Stake (PoS) protocol is a cryptocurrency consensus mechanism for processing transactions and creating new blocks on a blockchain. PoS allows cryptocurrency owners to stake their tokens, giving them the right to check new transaction blocks and add them to the blockchain. PoS requires much less power than Proof of Work protocols.

Perhaps the main reason for Ethereum’s recent performance against Bitcoin is the release of Ethereum 2.0 and its lighter, greener PoS protocol. The expected date for the launch of Ethereum 2.0 is sometime in June 2022.

Bitcoin continues to lead

However, Bitcoin remains the 700-pound gorilla of cryptocurrencies as of April 7 by virtue of its much stronger market capitalization.

Description: Crypto Rankings

Description: Crypto Rankings


The chart above shows that Ethereum has a long way to go to catch up with Bitcoin. On April 7, Bitcoin’s market capitalization of $826.49 billion was more than double Ethereum’s total valuation of $387.65 billion.

In an asset class awash with 18,713 other tokens and counting, Bitcoin and Ethereum are the leaders by far. Only 19 tokens have a market capitalization greater than $10 billion, and Bitcoin and Ethereum are the only cryptocurrencies worth more than $82.5 billion.

Bitcoin rises again, and Ethereum seems to be on track for November highs

The breakout of the wedge pattern of lower highs and higher lows has not yet lit the fuse for Bitcoin and Ethereum. However, if past volatility in major cryptocurrencies is anything to go by, the market could be about to experience another explosive move, as digital tokens have alternated between price explosions, implosions and more explosions in recent years.

If prices start to rise, a speculative buy-in is likely to return to the market. Bitcoin and Ethereum will certainly attract a lot of interest due to their liquidity and past performance.

Furthermore, in recent weeks, Ethereum has risen to the leading position as a fast mover through its sizeable percentage rise from late January lows. While price movement in this asset class could push prices to new highs above the November 10 peaks, past performance is never a guarantee of future results. Still, from a technical point of view, I would not be surprised to see another explosive rally in cryptocurrencies.

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