While the price of Bitcoin (BTC) ballooned to a 19-month high this weekend, Ethereum (ETH) has kept apace, surging beyond $2200 for the first time since May 2022.
On-chain analysts at CryptoQuant have identified three drivers behind the crypto’s stellar performance over the past month.
Ultrasound Money Takes Effect
As shared by analyst MAC_D, ETH broke through a key resistance/support level at $2000 last week, which marks the average price at which Ethereum users began staking ETH on the network.
“It is the average unit price for investors who want to hold ETH for the long term,” the analyst wrote. “Most of the long-term investors have turned to profit, which is likely to act as a key support.”
Staking requires users to lock their ETH inside the Ethereum network to earn future yield denominated in more ETH. Stakers are assumed to be high-conviction investors since staked ETH is generally thought of as untradable (although liquid staking solutions like Lido have helped remedy that limitation).
According to ultrasound.money, the issuance reward for Ethereum stakers is currently about 3.1% per year. There are now over 34 million ETH staked in the beacon deposit contract worth over $75 billion.
Staking began with the Merge upgrade last year, which also dramatically reduced the issuance rate for new ETH. This combined with the network’s transaction fee burn mechanism has made ETH issuance net negative, earning it the nickname “ultrasound money.”
MAC_D noted that this deflationary phenomenon has “intensified” since last month amid surging network activity.
“As a result, the total supply began to decline sharply, and since the news was announced, the total supply has decreased by -82,861 ETH,” the analyst explained.
Ethereum ETF Hype
Much of the growth in on-chain activity since last month has been driven by excitement over a potential Ethereum spot ETF, which global investment giant BlackRock applied for on November 10.
Though approval of such a product isn’t expected for some time, BlackRock’s support has helped spur market optimism that it’s on the way. Changing attitudes on the matter are reflected in the Grayscale Ethereum Trust discount, which has narrowed from 59% in December of last year to 14.58% today.
“This can be seen as one of the reasons why institutional investors’ massive buying of trust products pushed ETH higher,” concluded MAC_D.
ETH is now up 19.6% over the past month, while BTC is up 18.6%.
The post Why Ethereum’s Performance Is Rivaling Bitcoin’s: Analysis appeared first on CryptoPotato.
#AANews #CryptoNews #Bitcoin #ETH #Ethereum(ETH)Price [Source: CryptoPotato]