Ether has surged more than 100 percent since bottoming out in mid-June, as investors anticipate a major upgrade to the ethereum blockchain that will push ether to outperform bitcoin.
Bitcoin hit a low of $17,601 on June 19 and was up about 29 percent at $22,783.29 as of Friday, according to CoinDesk data.
In contrast, ether touched a recent low of $880.93 on June 19, but has since surged 106% to $1,822.24 at press time.
The huge difference in performance between the two cryptocurrencies is largely due to one factor: the much-anticipated Ethereum merger upgrade (The Merge) will take place on September 15, after which Ethereum will switch from proof-of-work (PoW) to proof-of-stake ( PoS) mechanism.
Antoni Trenchev, co-founder of cryptocurrency trading platform Nexo, said:
The upcoming Ethereum merger and upgrade is the hottest topic in the currency circle right now, which explains why Ethereum has left Bitcoin behind over the past month. The so-called “energy-efficient blockchain” will captivate the public’s imagination, which is why ethereum has been so smooth on the eve of the merger.
Can the rally continue?
However, with the cryptocurrency market experiencing a severe sell-off this year, bitcoin and ether are still down more than 60% from their all-time highs set in November.
In recent months, the cryptocurrency industry has been plagued by a wave of bankruptcies and liquidations, and the overall cryptocurrency market value has evaporated by nearly $2 trillion since its mid-to-high point in November last year.
Even so, ether’s recent surge has been phenomenal, doubling its price within two months.
One analyst said the rally could continue but could face some resistance at the $2,000 level.
With stocks rebounding due to the absence of the Federal Reserve meeting in August, “it’s reasonable to think that ether can sustain gains as we get closer to a merger,” said Jacob Joseph, a research analyst at data service CryptoCompare.
However, $2,000 is a big resistance for Ether, and the asset will need more support to break through this barrier.
Jacob Joseph expects that Bitcoin is unlikely to outperform Ethereum in the short term.
According to Antoni Trenchev, ether’s rally faces some risks, “in the event of a delay in the merger upgrade, we will see a massive reversal of ether’s 50% rally from mid-July.”
Antoni Trenchev said there is always a good chance to see traders taking profits on such a large rally,
If the merger and escalation is successful, there could be a “buy the rumor, sell the news” type of event, as we have seen the eye-popping surge in ETH.
