ETC Group Predicts Ether to Outperform Bitcoin in 2024
Analysts drawn from the ETF Group are forecasting ether to outperform Bitcoin in 2024, citing deflationary mechanisms and the growing attraction of staking yields. The head of research at ETC Group, André Dragosch, observed that ether could reverse the relative underperformance witnessed in 2023 compared to Bitcoin.
Dragosch illustrated that Ether’s rise would leverage technological advancements to blend with Ethereum’s positioning as the lead smart contract platform. The researcher indicated that Ether underperformed the lead token in the 12 months, though optimistic that the second-ranked crypto by market capitalization would realize a turnaround.
Multiple Factors to Propel Ether Price Appreciation
In the recent publication by ETC Group on the crypto market outlook, Dragosch illustrated several factors that will drive ether’s price upwards. The head researcher indicated that the token price would primarily rise from the deflationary burn mechanism unveiled by Ethereum in August 2021 as Improvement Proposal EIP-1559.
Dragosch proposes that the reduced ether supply combined with the desirability of
Dragosch added that this reduction in ether’s supply and the attraction of ETH staking yields could sustain a bullish momentum that could outperform Bitcoin.
The researcher observed that Ether’s current net supply issuance estimates are minus 1.1% annually since approximately 1.84% is burned annually. He referenced the traditional investors’ perspective to equate staking yield as similar to equity dividends. On the other hand, one can consider the burn rate to be representative of equity buyback yield.
Ether Mean Reverting in 2024
Dragosch demonstrated that Ether is bound to replicate the tendency to mean revert in its 12-month performance. He vouched for ether returning to the average relative performance against the top-ranked crypto.
Dragosch observed that, except for this year, ether consistently betters Bitcoin. The better performance has been sustained since Ether’s inception in July 2015.
Coinbase’s publication for the crypto market outlook illustrated that Bitcoin’s performance will experience mean reversion next year relative to ether. The San Francisco-based crypto exchange analysts indicate that ether’s discount will constitute the precursor to propel the token towards mean reversion.
The Brian Armstrong-led crypto exchange report decries that the softer fundamentals inherent in the Ethereum network remain a constraint towards realizing a meaningful price correction.
The Coinbase report illustrated that Ethereum transaction revenues by November slipped by 29% relative to the 11-month period last year. The report indicated that the network suffered inconsistent on-chain activity that manifests in volatile monthly ether supply.
Industry Executives Divided on Ether Outlook in 2024
Dragosch’s optimistic projection of Ether is contested by Holborn chief operation executive David Schwed, who indicated that though the dynamics portray likely price appreciation, it is no match for Bitcoin’s established role. The blockchain security expert suggested that Bitcoin would tap its stability position to outperform ether in the long run amid the halving and approving spot Bitcoin exchange-traded fund (ETF) in the United States.
The view by Holborn’s Schwed aligns with the majority of market analysts who consider that the likely approval of the pending bids for spot Bitcoin ETF would offer a regulated channel for traditional finance institutions (TradFi) to realize exposure to Bitcoin.
In the latest interview, ARK Invest Chief Executive Cathie Wood echoed the forecast for Bitcoin outperforming the rest of crypto. The American investor indicated that approval of the spot Bitcoin ETF would trigger an uptick in TradFi’s crypto uptake.
Wood considers that if TradFi allocated 0.1% to 0.2% of their trillions of capital towards Bitcoin, the price would realize a wild accelerated pump. She added that such an outcome will sustain a bullish momentum, considering that the Bitcoin supply is capped at 21 million tokens.
Wood’s forecast for Bitcoin to replicate the performance next year will benefit from the halving of Bitcoin rewards miners earn per every block completed. The units entering the market will reduce from the current 6.5 BTC to 3.125 per block. The reduced supply averts potential inflation, a reason the demand-driven pump in Bitcoin price outlasts Ether recovery.
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