Since its mid-June low, 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 was up about 31% from Friday’s trading price, according to data from CoinDesk. Ether also hit a recent low at $880.93 on June 19, but has since risen 106%.
The huge performance gap between the two cryptocurrencies is due to one main factor: a major Ethereum blockchain upgrade. Ether is the native cryptocurrency of the Ethereum network.
The Ethereum upgrade, dubbed the “merge,” is set to take place on September 15 after numerous delays. The blockchain will move from a so-called proof-of-work system to a model called proof-of-stake.
Proponents claim that this move will make the Ethereum network faster and more energy efficient.
The upcoming Ethereum merger is the biggest story in crypto right now and explains why Ether has outperformed Bitcoin over the past month, Antoni Trenchev, co-founder of crypto trading platform Nexo, told CNBC by email.
A blockchain that touts itself as energy-efficient will always capture the imagination of the masses, and that’s why Ether is riding high ahead of the merger, a move to proof-of-stake.
Sustainable rally?
Both bitcoin and ether are still more than 60% lower than their all-time highs – reached in November – due to a cryptocurrency market crash this year.The industry has been plagued by a series of bankruptcies, liquidity problems and project failures that have wiped nearly $2 trillion in value from the entire market since its peak in mid-November.
“However … $ 2,000 proved to be a huge drag for Ether and the asset needs more wind behind its sails to break through that level.”
Joseph added that bitcoin is unlikely to overtake ether in the short term.
According to Trenchev, there are risks for the ether price rally.
A further (unlikely) slowdown until mid-September Merge will be a slowdown across much of Ether’s 50% rally since mid-July, he said.
There is always a chance that traders will also take profits on the big rally, Trenchev said.
If the merger is successful, this could well turn out to be a buy the rumour, sell the news type event given the staggering gains we have seen on Ether, Trenchev added.
