• Analysts say that investors are likely to re-evaluate ether, as the narrative of the spot ETF gains steam. Ethereum is still the dominant chain within the DeFi/NFT space.
  • One observer stated that ether is a good choice for a core position in a crypto-diversified portfolio.

ETH Price Index and Live Chart – CoinDesk”>(ETH), the native token of Ethereum’s blockchain, underperformed bitcoin <a data-position="autolink" href="http://coindesk.com/price/bitcoin/" title="Bitcoin Price

Analysts predict that investors will revisit ether in 2019 as Ethereum remains the leading smart contract blockchain, with major upgrades planned. Ether is also widely regarded as the next candidate for a U.S. spot-based ETF.

In its weekly newsletter, Coinbase, a Nasdaq listed crypto exchange, said that “ETH is poised for a breakthrough year.” The bitcoin ETF announcement last week was a great boon for ethereum. It briefly spiked over $2,700, reaching its highest level since May 2022. There are even more reasons to be optimistic about ETH in the near future. “Several of the companies behind BTC ETFs, including BlackRock and VanEck, are also plotting spot ETFs based on ether.”

Spot ETF invests directly in cryptocurrency. This allows investors to gain exposure to this asset without owning it. It is considered to be a superior option to futures based, which can be vulnerable to Roll Costs. The launch of spot ETFs for ETH is likely to be a floodgate to retail and institutional money, similar to the spot BTC ETFs.

Last Thursday, nearly a dozen bitcoin ETFs started trading in the U.S. They have generated a total volume in excess of $10 billion. BlackRock’s product has attracted $ 1 billion in new inflows.

Upgrade Dencun and Institutional Demand

According to Coinbase, Ethereum’s Dencun Upgrade could also spark investor interest. The upgrade aims to increase the mainnet’s scaleability by introducing data blobs. The upgrade was launched on Ethereum Goerli’s testnet this week.

A blob can be a temporary memory of transaction data, typically Layer 2 Solutions. It is attached to Ethereum. After the upgrade to mainnet, the blockchain will only have to verify the data blobs attached to each block, reducing congestion and network fees.

Coinbase reported that “Ethereum’s Dencun Upgrade began initial testing on Wednesday, and in the coming months it is expected to implement EIP 4844 (EIP stands for “Ethereum Improvement Proposal”) which some ETH observers predict could help lower network fees by more than 90%.

In its Annual Report, the institutional crypto firm ETC Group discussed a bullish forecast for the ether/bitcoin rate and explained that, despite the 2023 boom in Bitcoin network activity due to inscriptions, Ethereum is still the most dominant chain for creating decentralized applications, non-centralized tokens and tokenized assets.

Data tracked by ETC Group shows that the top 10 ERC-20 Tokens have a market value of $19 billion, which is 13 times greater than the $1.6 Billion market capitalization for the entire BRC-20 universe of more than 37,000 coins. ERC-20, the Ethereum token standard is different from BRC-20, a fungible asset created by the Bitcoin network.

The a href=”https://www.stakingrewards.com/asset/ethereum-2-0″ rel=”noopener” target=”_blank”>current/a> annualized reward rate is around 3.84%, having averaged about 4% to 5% since Ethereum completed the ‘Merge’ in September 2022. The Current annualized rate of reward is about 3.84%. It has averaged 4%-5% since Ethereum completed Merge on September 2022.

The deflationary impact of Ethereum’s burning of a portion paid in ETH on transaction fees has been a positive factor for investors.

ETC Group stated that “the strong dominance Ethereum has in smart contract platforms, and the potential to earn additional yields, imply it should be a core holding within a diversified portfolio of cryptoassets.” We believe that the relative performance between ETH/BTC is likely to reverse in 2024. ETC Group said that historically, ETH/BTC’s 12-month relative performances have shown a strong trend to mean revert.

Ether is outperforming bitcoin this year. The ether-bitcoin (ETH/BTC ratio) has traded 10% higher. The ratio fell by over 25% in the past year.

Parikshit Miishra is the editor.