Analyst Bullish on Ethereum amid $2.9K jump

• Ethereum price just outshone that of Bitcoin with analysts projecting a shift to ETH.
• Ethereum’s spot ETF anticipation in the US could further drive bullish sentiments.

Ethereum (ETH), the second largest cryptocurrency by market capitalization has recently emerged as the star performer in the crypto market, surpassing Bitcoin’s (BTC) rally over the past week as it crossed the $2900 mark. 

This surge in Ethereum’s price has caught the attention of analysts and investors alike, with many attributing its success to favorable fundamentals and developments within the Ethereum ecosystem.

Fundamentals Fueling Ethereum’s Growth

Greg Magadini, the Director of Derivatives at Amberdata, has been particularly bullish on ETH, noting that its fundamentals appear more promising than those of Bitcoin (BTC).

Over the past seven days, Ethereum has seen a remarkable gain of over 16%, propelling its price above $2,900 for the first time in nearly two years. At the time of writing, Ethereum is changing hands for $2,934.22, up by 0.93% in 24 hours. In contrast, Bitcoin’s price rose at a more modest rate of 8.5% to $52,300 during the same period. This disparity in performance has led to a notable increase in the Ether-Bitcoin ratio, which has jumped nearly 7% to 0.055.

The recent outperformance of Ethereum comes after a period of trailing behind Bitcoin, as market attention was focused on the debut of spot BTC Exchange-Traded Funds (ETFs) in the U.S. and the upcoming halving for Bitcoin. However, Magadini believes that the focus could soon shift to ETH due to the reduction in its supply since the implementation of the Proof-of-Stake (PoS) consensus mechanism in September 2022, known as “The Merge”.

Magadini emphasizes that while much attention has been given to Bitcoin’s upcoming halving, Ethereum has already undergone an active reduction in its supply since the transition to PoS. This reduction in supply, coupled with Ethereum’s low ETH/BTC ratio and strong fundamental picture, makes it an attractive investment opportunity, according to Magadini.

One of the key milestones in Ethereum’s journey towards PoS has been the amount of ETH locked in the Beacon Chain. With over $111 billion worth of ETH now staked, Ethereum’s recent price surge seems to be in alignment with its staking achievements. Data from Nansen analytics shows a vibrant intra-day staking activity, with notable amounts of ETH being added and withdrawn from the staking contract.

Deflationary Trend and Supply Reduction

Since The Merge, Ethereum has witnessed a deflationary trend, with some portion of ETH being burned or taken out of circulation. 

Data from Ultrasound.money reveals that 1,047,643 ETH have been issued while 1,407,200 ETH have been burned since the upgrade, resulting in a net supply reduction of 359,557 ETH or 0.209% year-on-year. This reduction stems from Ethereum burning a portion of transaction fees paid to validators, effectively reducing the available supply of ETH in the market.

In addition to the coin’s supply dynamics, regulatory developments are also playing a crucial role in driving investor interest in the cryptocurrency. The Securities and Exchange Commission (SEC) is expected to greenlight spot ETH ETFs in the U.S. later this year. This regulatory approval could further boost investor confidence and liquidity in the Ethereum market.

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