Ethereum Gains Momentum: Key Factors Driving ETH’s Reversal Against Bitcoin in 2024

The ratio of ether to bitcoin has seen a 19% increase in the initial three weeks of this year, reclaiming a portion of the 25% decline witnessed in the previous year.

Ethereum’s native token, Ether ($ETH), faced challenges in outperforming bitcoin ($BTC) throughout 2023, primarily due to the latter’s emerging narratives around smart contracts, non-fungible tokens (NFTs), and the optimism surrounding spot-based ETFs. Analysts anticipate renewed interest in Ether in 2024, considering Ethereum’s prominent position as the leading smart contract blockchain with upcoming key upgrades, making Ether a potential candidate for a spot-based ETF in the U.S.

Coinbase, a Nasdaq-listed crypto exchange, expressed optimism about Ether’s prospects, especially in light of last week’s bitcoin ETF developments that also benefitted Ethereum. Coinbase highlighted that several firms, including BlackRock and VanEck, behind bitcoin ETFs are planning spot-based ETFs for Ether. Spot ETFs, investing in actual cryptocurrencies, are deemed superior to futures-based ETFs, making them attractive to both institutional and retail investors.

With nearly a dozen bitcoin spot ETFs recently launched in the U.S., accumulating a cumulative volume exceeding $10 billion, institutional and retail interest in spot-based ETFs is on the rise. Ethereum’s forthcoming Dencun upgrade, aimed at enhancing scalability through the introduction of “data blobs,” is expected to further captivate investor interest. The upgrade, currently on Ethereum’s Goerli testnet, will streamline transaction data memory, reducing congestion and network fees.

ETC Group, an institutional crypto firm, shared a bullish outlook on the ether-bitcoin ratio, emphasizing Ethereum’s dominance in decentralized applications, NFTs, and tokenized assets. Despite Bitcoin’s network activity surge in 2023, Ethereum’s role in the crypto space remains unrivaled. Ether investors can earn additional returns by staking or locking their coins, with an annualized reward rate around 3.84%. Ethereum’s practice of burning a portion of transaction fees has a deflationary impact on the token’s supply, which is seen positively by investors.

ETC Group predicts a reversal in the relative performance of ETH/BTC in 2024, highlighting Ethereum’s historical tendency to mean revert. Ether has demonstrated outperformance against bitcoin this year, with the ETH/BTC ratio trading 10% higher, a notable shift from the over 25% decline witnessed in the previous year.


Disclaimer: Not Investment Advice

it’s crucial to understand that the information provided here is not to be construed as investment advice. The crypto market is dynamic and highly speculative, and decisions should be made based on thorough personal research and consideration of individual risk tolerance. Always consult with financial professionals and conduct your own due diligence before making any investment decisions. The intention of this exploration is to present insights and trends, not to provide specific investment recommendations.

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