Ethereum Poised for Upside Despite Lagging Behind Bitcoin: Coinbase
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Despite Ether lagging behind its rival Bitcoin this year, Coinbase suggests the cryptocurrency holds strong long-term potential and may surprise the upside. In a research report released on Wednesday, Coinbase analysts provided an optimistic view of ETH, underscoring its resilience and growth potential in the evolving digital asset market.
Year-to-Date Performance: ETH vs. BTC
Ether, the second-largest cryptocurrency by market capitalization, has appreciated by 29% year-to-date. While this performance is notable, it pales in comparison to Bitcoin’s 50% surge over the same period. The broader crypto market has seen a 28% rise, indicating that ETH is performing in line with the overall market trend but not outpacing it.
Coinbase analyst David Han notes that “Ether may have the potential to surprise to the upside in the coming months,” highlighting the absence of significant supply-side pressures such as token unlocks or miner sell-offs.
Key Factors Supporting Ether
The report emphasizes several factors that could drive Ethereum’s value higher. Firstly, both staking and the expansion of layer 2 solutions have significantly reduced liquid ETH supply.
“Staking and layer 2 growth have proven to be meaningful and growing sinks of ETH liquidity,” wrote Han. These mechanisms decrease the available supply of ETH, potentially driving up its price.
Secondly, Ethereum’s position as the cornerstone of the DeFi ecosystem remains secure due to the widespread adoption of the Ethereum Virtual Machine (EVM) and innovations in layer 2 solutions.
The EVM enables the creation and execution of smart contracts, which are fundamental to the functionality of DeFi applications. This provides a strong fundamental backdrop for appreciation.
Another crucial factor is the possibility of U.S. spot ETH exchange-traded funds (ETFs). Coinbase suggests that the market may be underestimating the likelihood and timing of ETF approvals, which could significantly boost ETH prices.
“We think the market may be underestimating the timing and odds of a potential approval,” the report states, noting that litigation could reverse initial rejections, further driving speculative interest and investment.
Bullish Patterns Spotted
Analysts have identified bullish technical patterns that support a positive outlook for Ethereum. Technical analysts have observed a completed Bullish Cypher pattern, indicating a potential upward movement.
ETH has also bounced off the key 38.2% Fibonacci retracement support level around $2800, a historically significant level that often precedes price rallies during bull markets.
Ethereum’s previous spike above $4000 is seen as a major structural turning point, suggesting the beginning of a new long-term uptrend. Analysts like Titan of Crypto and JACKIS highlight these technical indicators as signs of an impending breakout.
Several well-known cryptocurrency analysts have expressed bullish sentiment for Ethereum. CryptoYoddha predicts that Ethereum could surge past $10,000 by the end of 2024, citing favorable on-chain supply dynamics and strong DeFi fundamentals. Michaël van de Poppe anticipates significantly higher prices in the coming weeks, noting that ETH appears to be in the final stage of its corrective phase.
These optimistic projections are grounded in Ethereum’s strong fundamental and technical position. The combination of reduced supply-side pressures continued DeFi dominance, and potential ETF catalysts create a favorable environment for Ethereum’s growth.
