The highest weekly growth of Ethereum in the last 3 months; Ether continues to rise against Bitcoin?

The price of Ethereum has increased by 16% in the past week, so that this digital currency has seen its highest weekly growth since July. The recent positive changes in Ether’s token economy are likely to help the digital currency surpass market leader Bitcoin in terms of price performance.

According to CoinDesk, the recent update of Ethereum’s smart contract platform has been effective in creating an upward trend in the price of its native token, Ether.

Data from CoinDesk shows that the price of Ethereum increased by more than 16% in the week ending on October 30 (November 8). This is the highest weekly growth of Ethereum in the last 3 months, which has overshadowed the 5% growth of the price of Bitcoin.

Jordi Alexander, chief investment officer at Seleni Capital, said:

Both major cryptocurrencies will (eventually) grow; But since people are still adjusting to Ethereum’s recent (post-Marj) token economy changes, the Ether movement will be faster.

On September 15, Ethereum changed its consensus mechanism from proof of work to proof of stake and replaced miners with validators; Institutions that stake capital in the form of Ethereum on this platform and are responsible for verifying the validity of transactions.

Since Marj’s update, the Ethereum supply has increased by 1,300 units. Now, if this blockchain had continued to use the proof-of-work mechanism, the net supply could have increased by over 481,000 units during this period.

Ethereum’s net issuance rate, also known as the annual inflation rate, has dropped from 3.6% to near zero, according to data obtained from the ultrasound.money website; Lower than Bitcoin’s annual inflation rate of 1.7%.

However, data from blockchain analytics firm IntoTheBlock shows that Ethereum’s net issuance rate has actually fallen below zero. In other words, Ethereum has become an anti-inflationary asset; A coin whose supply decreases over time instead of increasing. This comes at a time when investors around the world are facing a shortage of assets that can protect their money against record inflation.

Ethereum will likely continue to perform well

The Ethereum-to-Bitcoin price ratio, which measures the price of Ethereum compared to Bitcoin, has grown by 10% in the past week, marking the largest increase since July. According to prominent traders, Ethereum’s bullish trend against Bitcoin could continue.

Josh Olszweicz, head of research at digital asset management firm Valkyrie Investments, told CoinDesk:

Ethereum will likely continue to outperform Bitcoin; Because its annual issuance rate is rapidly decreasing. Therefore, thanks to the transaction fee burning mechanism in this network, any increase in on-chain (on-chian) activity should definitely bring Ethereum into the realm of deflationary issuance (asset), which may have a significant effect on the price of this digital currency.

In August of last year, Ethereum activated a mechanism that burns part of the transaction fees paid by users to the network. This mechanism essentially ties the number of Ethereums burned or out of circulation to the usage of the Ethereum blockchain.

So, as Olzweich said, increased network usage skews the supply and demand dynamics more in favor of Ethereum buyers. According to the statistics of ethburned.info, since August of last year, more than 2.6 million Ethereum worth 8.65 billion dollars have been withdrawn from circulation.

Shiliang Tang, chief investment officer at Ledger Prime, a digital currency investment fund, said that Ethereum’s anti-inflation appeal will increase over time and attract investors.

Tang says:

Currently, many marginalized capitals are more attracted to the story of Ethereum than to Bitcoin. I expect Ethereum to maintain its lead over Bitcoin; Because the anti-inflationary nature of Ethereum will gradually be felt over time.

He added:

As the current price (around $20,000) continues, Bitcoin will continue to be oversupplied by miners.

The Ethereum network’s change to proof-of-stake has permanently freed the market from the daily selling pressure of miners. According to Cumberland, Ethereum miners were selling $40 million worth of ether per day. Bitcoin still uses a proof-of-work mechanism; where miners solve complex algorithmic puzzles to validate transactions in exchange for rewards. These miners typically cash out their assets regularly to finance mining operations.

Macroeconomic problems continue

While Ethereum’s fundamental analysis underscores the continued bullish trend, the digital currency remains vulnerable to macroeconomic issues.

Many expect the Federal Reserve to raise interest rates for a fourth time by 0.75 percent on Wednesday, with policymakers to hint at a less dovish approach for the coming months. Expectations for a shift in the Federal Reserve’s stance toward more gradual contractionary policies have pushed the market back toward investing in riskier assets, including cryptocurrencies.

However, selling pressure is likely to return to the market if the Fed’s shift towards more gradual contractionary policies is accompanied by a message that key rates can remain elevated for a while longer.

Nick Timiraos of the Wall Street Journal, who is somewhat known as the Federal Reserve’s spokesperson, said in an article published earlier this week:

The central bank can keep interest rates high for a longer period of time; Because consumers and businesses are less sensitive to the contractionary trend of the current monetary policy. A 3 percent rate hike by the Federal Reserve this year has rattled asset markets.