The growing prominence of Ether and the diminishing dominance of Bitcoin suggest a potential transformation in the crypto market. Throughout 2023, the market has been characterized by low volatility and a slow start to the year. But according to a new report from K33, the recent volatility could be indicating the need for a new driver. Could it be that Ether holds the key?
Market Surge Driven by Debt Ceiling Prospects and Bitcoin Dominance
The recent market surge was partially catalyzed by the prospects of debt ceiling negotiations, increasing Bitcoin dominance and trading volumes. This, in conjunction with Ether’s deflationary stance, is causing a divergence in the correlation between Bitcoin and Ether.
Furthermore, Ethereum has entered its deflationary phase, experiencing negative supply growth of 1.46% annually. The network is projected to burn approximately $4.5 billion worth of ether, equivalent to 2,441,000 ether, throughout this year. Additionally, CryptoQuant data reveals that stakers have locked up over 13% of the total ether supply, leading to all-time lows in ether balances on exchanges.
Market Response and Sustainability of Ether’s Upward Trajectory
Ether has outperformed Bitcoin in terms of price gains over the last week, indicating a shift in market dynamics. Bitcoin is down 2% during the same period, while Ether is up 2.8%. The divergence in supply-demand economics between the two tokens may mark the start of a long-term regime change. Supplanting Bitcoin as the market driver could lead to increased prices for Ether as more investors adopt the network.
The recent bank crisis and the collapse of Silicon Valley Bank may drive investors towards alternative financial havens like Bitcoin. Observers will closely monitor the market’s response and assess the sustainability of Ether’s upward trajectory in the upcoming days.
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