Ethereum’s Ether Has Fallen Out of Investor Favor: Analysis and Predictions
Ethereum’s ether (ETH) has underperformed significantly compared to bitcoin (BTC) this year, with a 36% rise compared to BTC’s 109% surge. According to a recent report by Amberdata, the options-based probability density function shows only a 10% chance of ether topping the first quarter high of around $4,000 by the end of December.
This underperformance is attributed to weak fundamentals, including the shift of DeFi transactions to layer-twos (L2s) rather than the main Ethereum chain. As a result, the value proposition of ether as a store of value has been negatively impacted.
Amberdata’s Director of Derivatives, Greg Magadini, stated that “ETH faces serious headwinds as the value proposition of ‘sound money’ (aka deflationary supply due to transaction fee burn) has flipped to inflation supply as nearly all DeFi transactions are being executed on L2s as opposed to ETH L1 itself. I believe that’s drastically dragging prices down.”
Despite this, a potential acceleration in bitcoin’s uptrend could eventually drag ETH above $4,000, while maintaining its underperformance relative to BTC. However, any significant improvements in Ethereum’s fundamentals, such as the proposed Beam Chain overhaul, may take years to materialize.
Predictions:
* Ethereum’s ether will continue to underperform compared to bitcoin in the short term.
* The options-based probability density function will remain low, indicating a low chance of ether topping the first quarter high of around $4,000 by the end of December.
* A potential acceleration in bitcoin’s uptrend could eventually drag ETH above $4,000, but this will not significantly impact its underperformance relative to BTC.
* Any significant improvements in Ethereum’s fundamentals, such as the proposed Beam Chain overhaul, may take years to materialize.
Conclusion:
Ethereum’s ether has fallen out of investor favor, and its underperformance compared to bitcoin is expected to continue in the short term. While a potential acceleration in bitcoin’s uptrend could eventually drag ETH above $4,000, this will not significantly impact its underperformance relative to BTC. Any significant improvements in Ethereum’s fundamentals may take years to materialize.
