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Bitcoin Gains Ground: Analysts Predict Continued Dominance Over Ethereum

  • In May, Ethereum (ETH) outperformed Bitcoin due to enthusiasm around the approval of the Ethereum spot ETF. Market analysts highlight whether this outperformance will continue.
  • The SEC’s recent approval of key changes to spot Ether ETF rules has boosted Ethereum’s share price, but analysts expect demand for these ETFs to be modest compared to Bitcoin.

During May, the world’s second largest cryptocurrency, Ethereum (ETH), dominated over its top rival, Bitcoin. Thanks to the enthusiasm of the cryptocurrency community for the approval of the Ethereum ETF.

Lately, however, both Bitcoin and Ethereum seem to have been consolidating for a while. Bitcoin’s price has been finding ground around $68,000 before making the next move.

The BTC price has been fluctuating around this level for nearly two months after it hit an all-time high of $74,000 amid strong interest in exchange-traded funds (ETFs).

On the other hand, Ether (ETHUSD), the second-largest cryptocurrency, rose 1% to $3,768, marking a 31% increase in the past month. The enthusiasm surrounding spot Ether ETFs has driven the price of Ether higher compared to Bitcoin over the past month, but this outperformance could be temporary

In addition, the Securities and Exchange Commission recently approved key rule changes to allow spot Ether ETFs to trade, but it may take weeks or months for issuers to receive final approval to launch their products.

Ethereum spot ETFs and their likely demand

By Friday’s deadline, all applicants filed their revised S-1 applications with the SEC meeting the regulators’ requirements.

Despite this enthusiasm, many analysts believe total inflows into spot Ether ETFs would be a fraction of what we saw in spot Bitcoin ETFs. In a research note, J.P. Morgan analyst Nikolaos Panigirtzoglou wrote:

“We believe demand for spot ethereum ETFs would be a fraction of what we saw in spot bitcoin ETF[ s]…. We expect new spot ethereum ETFs to attract modest net inflows of $1 billion to $3 billion over the remainder of the year.”

The analyst highlighted several factors affecting Bitcoin and Ether market dynamics. Bitcoin’s initial head start may have saturated demand for cryptoassets. In addition, Bitcoin’s recent “halving” has spurred higher prices.

While Bitcoin is often seen as an alternative to gold and a store of value, Ether is linked to the Ethereum network, underscoring the different applications of these tokens.

Currently, Bitcoin’s market capitalization is $1.33 trillion, which is 2.5 times Ethereum’s market capitalization of $455 billion. Therefore, if Ether is to overtake Bitcoin at some point in the future, it has to put up a big fight against digital gold.

Cathie Wood prefers Bitcoin to Ether

Several leading market analysts, including Ark Invest’s Cathie Wood, prefer Bitcoin to Ethereum. She strongly supported Bitcoin over Ethereum during her speech at Consensus 2024, stating that Bitcoin is her unequivocal investment choice, according to Crypto News Flash report.

At the event, Wood highlighted Bitcoin’s distinctive attributes, describing it as a “global monetary system,” a “technology” and a “new asset class. “She argued that no other cryptocurrency matches Bitcoin’s potential and importance.

Wood foresees Bitcoin reaching a substantial share of the global money supply, potentially up to 20%, following examples such as the adoption of Bitcoin as legal tender in El Salvador.

In his view, Bitcoin is an “insurance policy” for countries and individuals facing erosion of purchasing power and wealth, according to the Crypto News Flash report.

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