Ether has hugely outperformed bitcoin since both cryptocurrencies formed a bottom in June 2022. Ether's superior gains have come as investors anticipate a major upgrade to the ethereum blockchain called \"the merge.\"<\/p>\n
Yuriko Nakao | Getty Images<\/p>\n
Since finding a bottom in mid-June, ether has massively outperformed bitcoin as investors anticipate a major upgrade to the ethereum blockchain.<\/p>\n
Bitcoin hit a low of $17,601 on June 19 and is up around 31% since then as of Friday's trading price, according to CoinDesk data.<\/p>\n
Ether also hit its recent low on June 19 at $880.93, but has surged 106% since then.<\/p>\n
The huge divergence in performance in the two cryptocurrencies come down to one major factor: a big upgrade in the ethereum blockchain. Ether is the native cryptocurrency of the ethereum network.<\/p>\n
Ethereum's upgrade, called the \"merge,\" is slated to take place on Sept. 15 after numerous delays. The blockchain will change from a so-called proof-of-work system to a model called proof-of-stake. A full explanation of the merge can be found here.<\/p>\n
Proponents say that the move will make the ethereum network faster and more energy-efficient.<\/p>\n
\"The upcoming Ethereum Merge is the biggest narrative in crypto right now and explains why Ether has left Bitcoin in its wake in the past month,\" Antoni Trenchev, co-founder of crypto trading platform Nexo, told CNBC via email.<\/p>\n
\"A blockchain that pitches itself as being energy efficient will always capture the imagination of the masses and that's why Ether has the wind in its sails ahead of the Merge, a move to proof of stake.\"<\/p>\n
But the recent ether rally, which has seen its price double in the space of two months, has been rapid.<\/p>\n
One analyst said that the rally could continue but there may be some resistance at around the $2,000 mark. Ether was trading at $1,814 on Friday.<\/p>\n
Jacob Joseph, research analyst at data service CryptoCompare, said that with no Federal Open Market Committee meeting scheduled for August and stocks seeing a rebound, \"it is reasonable to believe Ethereum can still rally as we edge closer to the Merge.\"<\/p>\n
\"However ... $2,000 has proved to be a major resistance for Ether and the asset needs more wind behind its sail to break that level.\"<\/p>\n
Joseph added that bitcoin is unlikely to outperform ether in the near term.<\/p>\n
There are risks to the ether price rally, according to Trenchev.<\/p>\n
\"Any further (unlikely) delays to the mid-September Merge will see an unwind in a large portion of Ether's 50% rally since mid-July,\" he said.<\/p>\n
There is always the chance that traders take profits too on the huge rally, Trenchev said.<\/p>\n
\"The Merge, if successful, might well prove to be a 'buy the rumour sell the news' type event, given the jaw-dropping gains we've seen in Ether,\" Trenchev added.<\/p>\n
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