Ethereum’s Growth May Outpace Bitcoin Due to Fundamental Advantages

The trend of Ethereum’s price growth outpacing Bitcoin’s may continue, thanks to a more constructive deflationary policy, according to Amberdata. This was reported by CoinDesk.

Over the past seven days, the price of the second-largest cryptocurrency by market capitalization has increased by more than 17%, while the digital gold’s price rose by only 9.4%.

Meanwhile, attention remains on Bitcoin amid the launch of spot ETF trading on January 11 and the influx of funds into these products, as well as the anticipation of the halving in April. The reduction of the block reward from 6.25 BTC to 3.125 BTC will halve the coin’s emission rate.

However, investors may soon turn their focus to the “notable reduction in Ethereum’s market supply,” noted Amberdata’s Director of Derivatives, Greg Magadini, in a weekly bulletin.

As a result of the major upgrade The Merge in 2022, the network transitioned to a Proof-of-Stake consensus algorithm and implemented a mechanism to burn a portion of the fees.

“Everyone is talking about Bitcoin’s halving in April, but it is nothing compared to the active ‘REDUCTION’ of ETH supply that has been happening since September 2022,” stated Magadini.

According to Ultrasound.money, since the hard fork, approximately 0.36 million ETH has been removed from circulation, with the current supply at 120 million coins. The first cryptocurrency’s inflation during this period was 1.71%.

Following the registration of a Bitcoin ETF, the industry has seen increased expectations for the SEC to approve similar products for Ethereum. The cryptocurrency’s price reached a local high after crypto influencer Ash Crypto published a rumor about a positive decision by the regulator by the end of March. The asset rose by more than 3% in a day, reaching around $2930.

“Combine the ‘burning of ETH issuance’ with dormant coins in staking, and mix it with spot ETFs actively placing assets in cold storage, and suddenly the cryptocurrency’s supply volume story becomes as bullish as possible from a fundamental perspective,” emphasized Magadini.

In January, analysts at QCP Capital also predicted that in the medium term, the anticipation of the launch of spot Ethereum exchange-traded funds would be a factor for the cryptocurrency’s growth outpacing Bitcoin.

In February, the share of ETH supply locked in staking reached 25%, and demand for the service rose to a four-month high.