Will Ethereum Continue to Underperform Bitcoin?
Since August 2022, Bitcoin has been outperforming Ethereum (ETH), gaining 42% against ETH. This trend has raised concerns about whether ETH will continue to lag behind BTC.
The Energy Efficiency Advantage of Ethereum
Ethereum’s switch from proof-of-work (PoW) to proof-of-stake (PoS) consensus systems is one factor that may support ETH in the future. PoS is more energy-efficient compared to PoW, which has faced criticism due to its environmental impact.
Ethereum as a Safe Haven
The PoS system in Ethereum offers stakers a base yield, making it a safe investment option. With a market cap of over $276 billion, Ethereum is considered the second most valuable crypto network, according to CoinMarketCap.
The Deflationary Nature of ETH
After the activation of EIP-1559 in August 2021, Ethereum will become deflationary. This system burns a portion of gas fees, reducing the circulating supply of ETH. In the past week alone, over 17,600 ETH have been destroyed, according to Ultra Sound Money.
Hot Take: Is Ethereum Set for a Recovery?
Despite underperforming Bitcoin recently, there are several factors that could contribute to a potential recovery for Ethereum. The energy efficiency advantage of PoS, the perception of Ethereum as a safe haven, and its deflationary nature all work in favor of ETH. Keep an eye on these factors as they may support a refreshing rally for Ethereum in the coming months.
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