As recent Bitcoin and crypto momentum cools, Ethereum (ETH) is rejecting lower lows, especially against Bitcoin (BTC). Decentralized finance (DeFi) researcher DefiIgnas joined X on December 8th divided Insights that suggest ETH could be on the verge of a rally that could see the second most valuable coin potentially usurp BTC's current position as the best-performing asset.
Reasons That Could Drive Ethereum Bulls
The researcher noted that ETH is down 24% against BTC in 2023. However, several fundamental indicators suggest that this is about to change. First, DefiIgnas pointed out that crypto investors are increasingly drawn to the Discounted Grayscale Ethereum Trust (GETH), which has rallied in recent months and outperformed Ethereum spot prices.
GETH is up 298% in the last few months, while ETH is only up around 100% over the same period. As GETH stock prices rose, the discount to spot ETH narrowed. This meant that more capital indirectly flowed into ETH, which led to higher demand.
Money flows into GETH | Source: @DefiIgnas on X
In addition to GETH's rise, the researcher remains bullish on Ethereum due to recent developments surrounding the approval of the first spot Bitcoin ETF. The crypto community expects the Securities and Exchange Commission (SEC) to approve several products, including those proposed by Fidelity and BlackRock.
According to DefiIgnas, all “attention, narrative and speculation” will be focused on the agency approving the first Ethereum spot ETF once the spot Bitcoin ETF goes live, likely in early 2024. BlackRock, the world’s largest asset manager , has already filed with the SEC to issue the first spot ETF for Ethereum.
The expected activation of the Cancun upgrade in the first half of 2024 is also likely to support Ethereum prices. Over the years, Ethereum has incorporated several upgrades. This includes switching from Proof-of-Work (PoW) to Proof-of-Stake (PoS) and revamping their fee auction mechanism, introducing ETH burning.
However, with Cancun, the goal is to directly improve the mainnet's capabilities by enabling several proposals, including EIP-4844 Proto-Dank Sharding, which aims to reduce gas fees associated with rollups. This update will further solidify Ethereum's commitment to significantly increase chain scalability and reduce gas fees over the years.
ETH looks stable, resistance at November highs
In terms of spot prices, ETH is solid against BTC when looking at the candlestick arrangement on the daily chart. It remains to be seen how prices react in the coming days.
ETHBTC price trending upwards on daily chart | Source: ETHBTC on Binance, TradingView
Still, ETH could extend its gains if there is confirmation of the December 7 gains. In this case, it may break the current consolidation as bulls aim to break above the November 2023 highs of around 0.058 BTC.
Feature image from Canva, chart from TradingView
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