Ethereum’s Stellar Performance: Three Key Drivers
While Bitcoin (BTC) reached a 19-month high, Ethereum (ETH) has also surged, surpassing $2200 for the first time since May 2022. On-chain analysts have identified three factors contributing to ETH’s impressive performance.
Ultrasound Money Takes Effect
Analyst MAC_D highlights that ETH broke through a crucial resistance/support level at $2000, which represents the average price at which Ethereum users began staking ETH. This level acts as a key support due to most long-term investors turning a profit. Staking involves locking ETH within the network to earn future yield. The issuance reward for stakers is currently around 3.1% per year, with over 34 million ETH staked in the beacon deposit contract.
The Merge upgrade and transaction fee burn mechanism have made ETH issuance net negative, leading to a decline in total supply.
Ethereum ETF Hype
The anticipation of an Ethereum spot ETF, applied for by BlackRock, has fueled growth in on-chain activity. Although approval may take time, BlackRock’s support has boosted market optimism. The narrowing discount of the Grayscale Ethereum Trust further reflects changing attitudes towards an ETF. Institutional investors’ significant purchase of trust products has also contributed to ETH’s rise.
Hot Take: Ethereum Outperforms Bitcoin
Over the past month, Ethereum has seen a 19.6% increase in value compared to Bitcoin’s 18.6% rise. With ultrasound money taking effect and excitement surrounding an Ethereum ETF, the future looks promising for ETH.
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