Ether Surpasses Bitcoin in Market Value

The Rise of Ether: Catching Up to Bitcoin

Ether, the native cryptocurrency of the Ethereum blockchain, has recently made a significant move, catching up to the recent rally seen in Bitcoin. This surge has been fueled by digital asset treasury companies that have accumulated over 2 million ether since June. This development is particularly noteworthy as it marks a shift in the relationship between the two largest cryptocurrencies.

Why It Matters

In previous bull markets, the prices of Bitcoin and Ether tended to move in a similar fashion. However, this correlation has weakened significantly over the past year. Before this period, it seemed that the entire crypto market was largely moving in sync with Bitcoin, raising questions about whether other projects could stand out from the original.

The situation changed when Bitcoin experienced a strong upward trend following the launch of ETFs in 2024. Additionally, President Trump's promises to position the U.S. as a leader in crypto also contributed to Bitcoin's rise. While Ether also received an ETF and benefits from Trump's policies, these factors had not translated into a similar price increase for Ether.

Understanding the Differences

Bitcoin and Ether are fundamentally different assets. Bitcoin is primarily viewed as a form of money, while Ethereum functions more like a giant tech company, albeit without a CEO, office, or board. The Ethereum blockchain was designed as a platform for decentralized applications, and any activity on the blockchain requires payment in Ether.

Alex Thorn, head of research at Galaxy Digital, notes that several narratives that drove Ethereum's performance in 2021, such as NFTs, web3, and the metaverse, have significantly declined in 2024.

Recent Developments

Over the past month, Ether has benefited from factors similar to those driving Bitcoin. Last week, Ether decisively broke the $4,000 price barrier, a level it had only touched briefly in the past three-plus years. As of Tuesday morning, Ether was trading above $4,400.

There has been a surge in buying activity. According to CoinShares, more than a billion dollars worth of exchange-traded Ether products were purchased on Monday, marking a record. Such purchases have nearly doubled from the previous year.

Companies Accumulating Ether

Certain companies pursuing a cryptocurrency accumulation strategy have started buying large amounts of Ether. Led by Bitmine Immersion Technologies (BMNR) and Sharplink Gaming (SBET), these companies aim to accumulate more cryptocurrency per share over time using financial engineering, without diluting investors.

This approach means that one purchase of stock can grow its holdings of an underlying cryptocurrency over time. Collectively, these companies are approaching 2% of the total supply under management, with a significant new purchase of 317,000 Ether announced by Bitmine on Monday.

A more favorable SEC environment also looks likely to approve Ether ETFs, providing a small yield for token holders on-chain. This should make the products more attractive to investors.

Expert Perspectives

Houston Morgan from multichain investing platform ShapeShift notes, "For years, Ethereum has lived in the shadow of its elder sibling, Bitcoin. But that era is ending. ETH is on the cusp of stepping into its own spotlight. Ethereum price action is increasingly driven by its own fundamentals."

By the Numbers

Since the start of the year, Bitcoin and Ether have seen roughly similar gains, despite Ether lagging for most of that period. However, Ether still has a long way to go to truly catch up. Bitcoin is closing in on a 300% appreciation since the beginning of 2024, while Ether is close to doubling its price over the same period.

What to Watch

The market has begun to differentiate between major cryptocurrencies, and despite Ether's recent rise, this trend is expected to continue. James Butterfill, head of research at Coinshares, tells Axios, "As the market matures, that correlation will deteriorate further."

In the meantime, Ether remains 9% away from setting a new all-time high, but it has risen that much in the last few days. However, Bitcoin is about 3% away from setting its own fresh record.