Ether's Potential Comeback in the Crypto Market
According to Steno Research, a recent report highlights the potential resurgence of Ether (ETH), the second-largest cryptocurrency by market capitalization. Although Ether has experienced a period of underperformance, it may soon regain its strength both in terms of its own value and relative to Bitcoin (BTC). Ether has risen nearly 8% since the start of the year, while Bitcoin has surged by 43%, and the CoinDesk 20 index (CD20) has gained almost 11%.
Historical Performance and Market Trends
The report points to Ether's performance during the last bull market as an indicator of its potential. During the altcoin season, Ether more than doubled in value compared to Bitcoin in less than two months. This growth was primarily driven by increased onchain activity, including developments in decentralized finance (DeFi), stablecoin issuance, and the boom in non-fungible tokens (NFTs), largely occurring on the Ethereum blockchain.
Impact of Federal Reserve's Interest Rate Cut
Steno Research suggests that the recent interest rate cut by the U.S. Federal Reserve could lead to more onchain activity, benefiting Ethereum significantly. Onchain activity refers to transactions and activities that happen directly on a blockchain network, and for Ethereum, this includes the use of DeFi platforms and the trade of NFTs.
Comparison with Bitcoin and ETFs
The report also notes that the recent outperformance of Bitcoin over Ether may not continue indefinitely. Bitcoin's rising popularity is partly due to the impact of spot ETFs and buying pressure from companies like MicroStrategy (MSTR). Additionally, Ethereum's transactional revenue has seen a decline recently, which has affected its performance.
Current Onchain Activity and Network Strength
Despite these challenges, Ethereum's active addresses remain robust. The growing adoption of rollups, which are solutions that help increase the scalability of blockchains, indicates the network's enduring strength. According to analyst Mads Eberhardt, Ethereum's transactional revenue seemed to have hit a low point in August.
Optimistic Outlook and Industry Support
Moreover, Bitwise Asset Management expresses a positive outlook for Ether, viewing it as a potential contrarian bet towards the end of the year. A contrarian bet is an investment strategy that involves going against prevailing market trends, anticipating a future rise in value.
In conclusion, the combination of potential market conditions and historical trends suggests that Ether might be on the verge of a significant upswing, driven by both fundamental blockchain innovations and favorable macroeconomic factors.
