The price of Bitcoin, Ethereum and other crypto markets is subject to fluctuations. That’s why crypto investors must carefully monitor the market movement to avoid huge losses when prices are low. A crypto bear market can also provide an opportunity for investors long-term to profit from low prices, and then purchase assets they can use during bull runs.
However, the past months’ losses have been nearly unbearable for investors as factors such as interest rate hikes and inflations escalated the issues. However, crypto markets have seen some improvement in recent weeks due to massive price rises for some assets.
Ethereum is one asset that has performed exceptionally well, with over 9% gain in the last seven days. Ethereum’s performance brought the total crypto market capitalization back to the $1 trillion mark.
These are the Three Factors That Drive Ethereum’s Performance
Oct 25, was the start of the rally. Ether saw a 17% gain, while BTC gained only 6%. Some analysts explained the remarkable performance of Ethereum over Bitcoin.
Grayscale, an institutional assets manager, said Ethereum’s supply level after the merge might have influenced the asset’s performance. ETH supply was significantly lower before the merger. After the merger, ETH issuance fell to 14,000 ETH per hour and less than 5,000,000 per year.
In order to fund expenses in the long crypto winter, Ethereum miners also had to sell their assets. The proof-of-stake transformation has made the situation more favorable, decreasing the selling pressure. Grayscale November’s report found that the decreased selling pressure allowed for more positive up movements in the ETH market.
Ultrasound Money stated that Ethereum supply growth has slowed to 0.09% annually. In the last few weeks, ETH supply has experienced deflationary growth several times. This happened because the demand for network ETH increased. It led to more tokens being burned than were produced. Theoretically, ETH’s attractiveness as a long-term asset has increased.
The Outlook on Energy Consumption and Ether Prices VS. Bitcoin
Additionally, Ethereum’s energy consumption has been reduced by 99.9% following the merger. This makes the asset even more sustainable. This has made ETH attractive to governance-conscious, social, and environmental institutions.
According to the Digiconomist Ethereum energy Consumption Index, the annual energy consumption decreased from 84 TW/h to 0.01TW/h in the year after the merger. These factors make Ethereum an attractive investment option than Bitcoin. This is evident in its performance recently.
Ethereum currently trades at $1,552. The price of Ethereum jumped to $1.645 on Oct 29th, the highest level since September. But it did not move higher, and it’s still 67.6% down from its November 2021 all-time high.
ETH gained 24% in the past month but still range-bound like it’s been since May. This number is somewhat better than Bitcoin’s price decline.
Bitcoin fell more than 70% since November 2021, when it reached its all-time peak. Bitcoin trades currently at $20,000. The market share of Bitcoin is currently 38.77% with a capitalization totaling $393 billion.
Featured image by Pixabay, chart from TradingView.com