All major cryptocurrencies climb. Ethereum was the first of the top digital assets to move this time. ETH broke violently higher from its August range, rising some 15% over the last four sessions and pulling well ahead of bitcoin. In the view of economists at BBH, Ethereum is set to consolidate its gains.
Ethereum to continue beating Bitcoin
“Multiple forces are supporting Ethereum, including EIP 1559, which embeds a burn mechanism in transaction fees to reduce supply, leading to ETH inflation rate dropping from around 3% to 1%.”
“The boom in non-fungible tokens (NFT) and blockchain gaming continues. There are also some major developments to improve ETH’s scaling and lower transaction costs in what is known as ‘layer 2’ solutions, such as Optimism and Arbitrum, which just went live. These solutions may reinvigorate appetite for decentralized finance protocols, which are still recovering from the slump in Q3.
“All of this could mean the continued outperformance of ETH against BTC and a greater risk of a ‘flippening’ – when the market cap of ETH ($434 bln) surpasses that of BTC ($906 bln).”