Bitcoin, Ethereum, and the entire crypto market is often prone to price fluctuations. That’s why crypto investors must carefully monitor the market movement to avoid huge losses when prices are low. The crypto bear market could also be a time for long-term investors to leverage low prices and purchase assets which they can sell during bull runs.
However, the past months’ losses have been nearly unbearable for investors as factors such as interest rate hikes and inflations escalated the issues. Nevertheless, the crypto market has recorded some relief in the past week as some assets saw massive price rallies.
Among the assets that performed well is Ethereum, having seen over 9% gains in the past seven days. Ethereum’s performance brought the total crypto market capitalization back to the $1 trillion mark.
Three Factors Driving Ethereum Performance
The rally started on October 25, with Ether gaining 17%, while BTC only managed to add 6% over the same time. Some analytics explained why Ethereum had such an outstanding performance over Bitcoin.
Grayscale, an institutional assets manager, said Ethereum’s supply level after the merge might have influenced the asset’s performance. ETH supply was so much before the merge. But ETH issuance dropped after the merge to approximately 14,000 ETH per day and less than 5 million per year.
Moreover, like BTC miners, Ethereum miners had to sell assets to cover expenses during the long crypto winter. However, the situation has improved after the proof-of-stake transition, minimizing the selling pressure. Grayscale November report revealed that the reduced selling pressure exposed the ETH price to more positive upward movements.
Ultrasound Money reported that Ethereum supply growth is now only 0.09% per year. ETH supply switched to deflationary growth many times in the past weeks. It happened when the network ETH demand increased, leading to the burning of more tokens than produced. Theoretically, ETH’s attractiveness as a long-term asset has increased.
Energy Consumption Rate And Ether Price Outlook VS. Bitcoin
Moreso, Ethereum energy consumption was reduced by 99.9% post-merge, making the asset more environmentally friendly. That has made ETH more appealing to environmental, Social, and governance-conscious institutions.
Digiconomist Ethereum Energy Consumption Index revealed that the energy consumption reduced from 84 TW/h per year to 0.01 TW/h after the merge. The listed factors made Ethereum a better prospect for investors than Bitcoin, reflecting on its recent performance.
Ethereum is currently trading at $1,552. Its price jumped to $1,645 on October 29, the highest since the middle of September. But it did not move higher, and it’s still 67.6% down from its November 2021 all-time high.
ETH gained 24% in the past month but still range-bound like it’s been since May. This number is somewhat better than Bitcoin’s price decline.
Bitcoin dropped more than 70% from its November 2021 all-time high. Currently, Bitcoin is trading at $20,300. Its market dominance is now 38.77%, and a total capitalization of $393 billion.
Featured image from Pixabay and chart from TradingView.com