Ethereum Aims for $10k in the Next Bull Market, Expected to Outperform Bitcoin
The forthcoming launch of the Ethereum ETF in the United States, which will directly hold ether (ETH), is expected to attract significant inflows, with K33 Research estimating that it could bring in $4 billion within the first five months. The prediction from K33 Research is based on an analysis of the amount of money managed in existing ETH-based exchange-traded products worldwide, as well as a comparison with similar products for bitcoin (BTC). Additionally, the firm looked at the volume of futures contracts being traded on the Chicago Mercantile Exchange (CME), which is of particular interest to institutional investors.
In addition to the ETF approval, there are other factors that suggest Ethereum (ETH) may outperform Bitcoin (BTC) in the second half of this market cycle. A crypto analyst recently highlighted five reasons why ETH might be a better investment than BTC. These reasons include the recent changes in the Ethereum network, such as the merge, EIP-1559, and the introduction of ETH ETFs. The analyst argues that ETH is a more reflexive asset than BTC, although this has not yet been fully reflected in the current bull market. The analyst’s tweet outlining these reasons has gained attention within the crypto community.
Among the reasons cited by the crypto analyst is the lower operating costs for validators on the Ethereum network compared to Bitcoin miners. This means that Ethereum validators do not need to sell as much ETH to cover their expenses, unlike Bitcoin miners who often sell BTC to cover their higher costs. Another factor is the token incentives, as Bitcoin pays significantly more to miners on a daily basis compared to Ethereum, resulting in higher selling pressure for BTC. The recent implementation of EIP-1559 on Ethereum, which includes a token burn mechanism, has also contributed to the bullish outlook for ETH. This mechanism burns a significant portion of user transaction fees, reducing the overall supply of ETH and potentially increasing its value. In contrast, Bitcoin has a fixed supply.
The locked supply of ETH is another factor that may contribute to its price stability and potential price appreciation. Approximately 40% of ETH is locked in decentralized finance (DeFi) services or used as collateral, reducing its circulating supply. This scarcity can have a positive impact on its price. Furthermore, the higher on-chain activity on the Ethereum network, driven by activities such as DeFi, layer 2 solutions, gaming, and non-fungible tokens (NFTs), leads to more ETH being burned, further reducing its supply and potentially increasing its value.
In light of these factors, there is growing optimism regarding the price potential of ETH. Following the approval of a spot ETH ETF, Ethereum has broken out of a multi-month falling wedge pattern. Crypto analyst Jelle suggests that if ETH surpasses the $4,000 mark, it could rally to $10,000. Currently, ETH has successfully reclaimed the $3,810 price range and briefly tested the $3,900 price range, with a market cap of $457 billion.
Overall, the approval of the Ethereum ETF and the various factors supporting Ethereum’s performance compared to Bitcoin have generated positive sentiment among market participants, with expectations of significant inflows into the ETH market and the potential for a substantial price rally.