Ethereum has the Potential to Outperform Bitcoin in a Long Run

In a long run, ethereum outperforms bitcoin on several instances, taking the cryptocurrency to the peak

After a blistering start in 2021, the bitcoin price hit rock bottom before bouncing back to a moderate state. On the other hand, the second-largest cryptocurrency, Ethereum, has also seen sharp falls and constant spikes since the beginning of the year. Although both the digital currencies are facing severe volatility and uncertainty, the recent trend has changed the tailwind of Ethereum's market presence. In the long run, ethereum outperforms bitcoin on several instances, taking the cryptocurrency to the peak.

The bitcoin price has lost a third of its value since soaring to almost US$65,000 in April. Ethereum took more time to crash by 50% in mid-May. In a nutshell, both the cryptocurrencies faced severe price falls in 2021 and the only thing that kept them running was the investor's hope that just like many other drastic prices falls in the past, this could also be a stump before the digital currency market hits an all-time high again. The digital currency market has an unsaid trend. Mostly, many cryptocurrencies follow bitcoin's pattern of rising and fall. But over the past six months, a lot has changed and digital currencies have also diluted the trend. Remarkably, this consolidated pattern is setting up healthy and long-term stability for the world's second most-traded cryptocurrency, Ethereum. Following the launch of ethereum ETF on a Canadian exchange, Ethereum outperforms bitcoin strongly. Besides, bitcoin only serves as a major source of investment and as a crypto asset. But ethereum is different. It's a software platform for things like non-fungible tokens and financial services among others.

A Look at the Current Market Trend

Ethereum has outpaced Bitcoin's market stance and rallied above the US$2,550 mark recently. The digital currency breached its resistance level of US$2,500 and US$2,550 marks and traded at US$2,700 last month before facing a downside correction. During the recent swing, ethereum formed a consolidation near US$2,508. It is also testing the 23.6% Fib retracement level of the recent decline from the US$2,700 swing high to US$2,508 high. But the recent trend in ethereum is forming a resistance near the US$2,630 level. A clear break of the consolidation would mean that the digital currency could reach new heights and mark record price spikes.

Reasons Why Ethereum Outperforms Bitcoin on a Long Run

To begin with, ethereum and bitcoin, are two different cryptocurrencies that work at different paces. Bitcoin is often seen as a store of value, an asset that could even compete with gold and other pricey commodities. On the other hand, ethereum stands as the backbone of the cryptocurrency market and serves as a major exchange medium. But that too has its downside. A higher proportion of ether tokens face severe volatility compared to bitcoin.

Recently, the cryptocurrency industry was hit hard by a liquidity shock that originated in the derivatives market. Although all the digital currencies faced the storm, bitcoin was the most affected. But ether made a remarkable stand and hung on while bitcoin slipped. The on-screen liquidity of the bitcoin market is high due to investors who invest their money in bitcoin when it is on a spike and pull it out when the market faces small crashes. This caused shocks to reverberate across the industry.

But Ethereum is often out of these risks. Its lack of reliance on derivatives markets to transfer or warehouse has fixed it as a stable investment and trading source. Besides, ethereum also sees a higher number of transactions on the public blockchain than bitcoin does. Ethereum's active development team has contributed greatly to push the technological boundaries to accommodate smart contracts.

Bitcoin's Constant Fall

Bitcoin's unstable market presence is seen as a major reason why crypto investors are looking over the digital currency. Although the pseudonymous Satoshi Nakamoto has left behind the bitcoin white paper with a hope that it will change the way money is stored and introduced a decentralized model, the digital realm evolves and the trends require more advancements as more digitization is added.

The power-hungry concept that pushes miners to the brink of breaking down due to government restrictions has made bitcoin pay a hefty price. The bitcoin mining process goes against the climate accord that global leaders are engaging within the dilapidated world. At a time when taking climate measures are a must, bitcoin is costing highly on the environment as well.