Ether outperforms Bitcoin

The price ratio between bitcoin and ether hit its highest level since December. This means that Ethereum has outperformed Bitcoin in recent months.

This Wednesday, the cryptocurrency market is in the red. The queen of cryptocurrencies, bitcoin, is trading below $19,000 this Wednesday at 10:00 am, thereby breaking the $20,000 support again. A scenario that investors have feared for some time. For its part, Ethereum follows the move, shedding $200 in 24 hours and trading around $1,500 at 10:00 am.

The highest level since December last year

Despite this downward trend, the phenomenon of the moment is this divergence that forms between the biggest cryptocurrencies when bitcoin cries and ether laughs. In fact, this price gap becomes an investment topic. Indeed, on Tuesday, the ratio of bitcoin to ether (bitcoin/ether) reached its highest level since December 2021: 0.083 bitcoin equals 1 ether, according to TradingView data. This Wednesday, the ratio dropped slightly to 0.08 bitcoin, the equivalent of one ether. Concretely, Ethereum outperforms Bitcoin in terms of momentum. Basically, the closer the ratio is to 1:1 parity, the stronger Ethereum will be against Bitcoin.

While Bitcoin is mostly suffering from the current strength of the dollar, Ethereum is benefiting from a booster effect: On Tuesday, the founders of Ethereum launched the latest blockchain upgrade known as Bellatrix. In a week, this should lead to a large migration of Ethereum to a new blockchain that is less energy-intensive and more efficient. A migration called “Merger” (see our “Understand Everything” article on merger), which is an investment topic in itself.

Merging in sight

So investors could continue to arbitrage because at the end of this migration we could be witnessing a phenomenon called a “hard fork”, namely that investors would always have the option to tamper with the old blockchain if the protocol ever or be successful. with even more complex forms of arbitration between the old and the new version.

So be careful, at the end of August we saw that in two weeks a kind of speculative bubble had formed, already anticipating this important event. There, the phenomenon is gaining momentum again and could have the same negative outcome, especially if the dollar continues to rise against any currency, as it is currently doing, and cryptocurrencies are at the forefront of the correction.

Antoine Larugaudry edited by PA

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