The central theses
- The ETH:BTC ratio hit a 2022 high of 0.084 early Tuesday.
- Ethereum outperforms Bitcoin as ‘the merger’ draws near.
- The first step of the blockchain’s number two proof-of-stake update is set to go live today.
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The ETH:BTC ratio hit 0.084 on Tuesday.
Ethereum rallies against Bitcoin
With “the merge” just days away, Ethereum is rallying against Bitcoin.
ETH/BTC YTD (Source: TradingView)
TradingView data shows that the ETH:BTC ratio surged to a 2022 high early Tuesday, surpassing 0.084 for the first time since December 2021. The ETH:BTC ratio is up around 58% from around 0.053 in mid-July. The “ratio” refers to the cost of 1 BTC in ETH terms. At a ratio of 0.084, 1 BTC is worth around 12 ETH.
Ethereum enthusiasts have discussed the ratio extensively in the past in connection with “flipping”.—a hypothetical event in which Ethereum would overtake or “flip” Bitcoin’s market cap. The ETH:BTC ratio was above 0.1 in June 2017 and January 2018, but for a flip to occur it would need to reach around 0.159 based on the current circulating supply of both assets (since the supply of ETH and BTC -Coins adjusts over time, the ratio also changes).
Ethereum’s current lead over Bitcoin can be explained by the growing hype surrounding Merge, the long-awaited proof-of-stake upgrade of the number two blockchain. The merge is scheduled to ship sometime between September 13th and 15th, and the first part of the event is taking place today. Referred to as Bellatrix, Ethereum will self-upgrade its pre-merger consensus layer in the first step of the upgrade. The second phase, known as Paris, is then completed when the overall terminal difficulty threshold reaches 587500000000000000000000, marking the difficulty required to mine the final block under Proof-of-Work. After that, any new Ethereum blocks from validators staking ETH are added to the chain.
The market is waiting for the merger
After years of delays, the merger is widely anticipated to be the biggest crypto event of 2022. It is said to bring several major changes for Ethereum, including a 99.99% reduction in energy consumption and a 90% cut in ETH issuance. That’s partly why ETH has rallied over the past few weeks. Interest in the update is such that many Ethereum-adjacent tokens, including Ethereum Classic’s ETC and Lido’s LDO, have rallied alongside ETH in recent weeks. Ethereum Classic has benefited because miners are moving to the network before becoming obsolete on Ethereum; its hash rate hit a record high on Monday. A group of Proof-of-Work advocates also plan to fork Ethereum to create a new network that will host a hub for miners. The initiative known as EthereumPOW is expected to follow the merger and could potentially result in an airdrop of tokens on the new chain for ETH holders. Several major exchanges, including FTX and Binance, have confirmed plans to support the airdrop on top of the merger.
According to CoinGecko data, ETH was trading at $1,664 at press time, up around 6.2% over the past 24 hours.
Disclosure: At the time of writing, the author of this article owned ETH and several other cryptocurrencies.
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