Bitcoin Outpacing Ethereum Before The Merger

Key receivers

Bitcoin outperforms Ethereum even though the “unification” is fast approaching. After hitting critical support, Bitcoin's dominance increased, and ETH:BTC appears to be significantly higher. If crypto history is any indication, the Ethereum merger could be a “selling the news” type of event.

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Bitcoin has outperformed Ethereum in the past few days, though, as the number two blockchain is set for its biggest upgrade ever.

The strength of Bitcoin

Ethereum is getting closer to its long-awaited Proof-of-Stake update, but Bitcoin is still in the spotlight.

Bitcoin extended its gains on Monday, currently trading at $22,229. Ethereum, meanwhile, is trading at $1,715 after suffering a 3.3% dip. The second crypto correction comes despite the “consolidation” approaching and stocks trading in the green across the board to start the week. (S&P 500 up 0.74%, Dow Jones 0.54%, and Nasdaq 0.55%).

Bitcoin showed strength after breaking through the $18,600 support on Wednesday; The top cryptocurrency rose almost 20 percent. The weekly RSI is showing a bullish divergence for the first time since March and the monthly is showing a bullish divergence for the first time since September 2021.

Interestingly, the ETH:BTC ratio declined after hitting the 2022 high of 0.085 on Wednesday. It is now trading at 0.077, down 9.2%. The ratio previously touched 0.053 in June before ETH led a broad rally in the market; For ETH:BTC to revisit the low range, it has to decline another 33.49%. The “ratio” refers to the amount of ETH it takes to buy one BTC. At a ratio of 0.077, one BTC is worth approximately 13 ETH.

According to TradingView, BTC's overall market dominance (representing the largest share of the global cryptocurrency market capitalization) get up 39.79% support for several years after dropping to 41.28%.

Playing integration

Ethereum's decline in Bitcoin comes despite growing enthusiasm for the biggest correction in history.

This week, the blockchain will “merge” from proof-of-work to proof-of-stake, which will reduce energy consumption by 99% and ETH emissions by 90%. The merger is expected to ship as early as September 15, but ETH has yet to regain its August high of $2,015.

While the merger may result in a reduction in supply that could have a positive effect on ETH's price in the long term, the merger may be a “news selling” event that leads to a sell-off after the fact. BitMEX CEO Arthur Hayes told Bankless last week that he was optimistic about how the merger would affect the price of ETH, but admitted that investors could suffer in the short term if they sold on the news of the merger. Such incidents are common in the crypto space. Bitcoin touched a months-long high of nearly $65,000 on April 14, 2021 when Coinbase held its initial public offering on the Nasdaq before falling for weeks. Dogecoin, meanwhile, later took a big hit Elon Musk premiered his highly anticipated hit “Dogefather” on Saturday Night Live on May 8, 2021. He hasn't regained his top form yet.

As Bitcoin's dominance continues to rise and the ratio between the two top crypto assets continues to rise sharply, Ethereum could cover itself before its biggest update ever. If so, there is probably no “reversal” on the horizon.

Disclaimer: At the time of writing, the author of this article owns BTC, ETH and many other cryptocurrencies.

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