Ether (ETH) price outperformed Bitcoin (BTC) by 173 percent from March 28 to May 15. The coin went up to an all-time high of $4,380. After the sharp decline that started in the market as of May 12, the trend started to reverse. Since then, the Ether price has underperformed by 25 percent.
It can be said that this is a technical adjustment after a strong rally. However, as the smart contract network’s competitors are advancing rapidly, some critical factors may change the trend, such as the adoption of Bitcoin as the official currency for the first time.
Although Ether price is 36 percent below its all-time high and close to $2,800, the ETH/BTC pair rose again on June 8 to reach 0.77.
Mike Novogratz interview may have been misinterpreted
The bull market in Ether price has potentially gained further strength with strong interest from institutional investors. In the process, traders could feel like missing the opportunity known as FOMO and shift their Bitcoin investment to the largest altcoin.
On May 13, The New Yorker magazine published an interview with Mike Novogratz, founder and CEO of Galaxy Digital. Novogratz said:
“Ethereum, decentralized finance, and NFTs all of a sudden hit the investor’s radar. With accelerated growth…”
Novogratz later replied on how high Ether could reach:
“You know, it’s dangerous to make predictions about peaks. Can it still reach $5,000? Of course it can.”
While Ethereum holders interpreted it as a prediction, experienced investors probably perceived it as an over-the-top prediction based on the general conditions of the cryptocurrency market.
However, a report released by Goldman Sachs about a week later said that the global investment bank believes Ether “has a good chance of overtaking Bitcoin as a dominant store of value.” Interestingly, one of the main quotes in the report was directly from Novogratz’s interview with The New Yorker.
Binance Smart Chain reaches 40 percent of peak DEX volume
While 80 percent of the net worth locked in decentralized finance (DeFi) applications is realized through the Ethereum network, Binance Smart Chain (BSC) has reached 40 percent market share in decentralized exchanges (DEX).
The growth of the DeFi industry and unique token (NFT) markets has caused congestion on the Ethereum network, with transaction fees peaking at $37 in mid-May. This bottleneck has resulted in a diversion to competing networks. PancakeSwap gained great value in this process.
About: Reasons why Bitcoin will outperform Ethereum in the short term
The integration of key decentralized projects into Binance Smart Chain, including Harvest Finance and 1inch, has been a negative development for Ethereum.
No country accepts the ‘Ethereum standard’
Bitcoin has performed below average in the last 30 days as it failed to break the $42,000 resistance despite multiple attempts. However, El Salvador adopted Bitcoin as its legal currency on June 12, marking an important milestone in the industry.
Following the Central American country, other Central and South American countries began to calculate the advantages of following a similar path.
While Ethereum has been redesigned from the Proof of Work model, Bitcoin guarantees backward compatibility with each update and follows a strict monetary policy.
These reasons prevent Ethereum from outperforming Bitcoin.
Professional traders avoid uncertainty at all costs. The general cryptocurrency market is already covered with uncertainty. Institutional investors have no reason to take risks when competing networks are stealing Ethereum’s bread.
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