Ethereum Outperforms Bitcoin in Early 2024 on ETF Expectations, Network Upgrades

Ethereum (ETH) is outperforming Bitcoin (BTC) in early 2024, with the second-largest cryptocurrency up 15% year-to-date compared to BTC's 6% decline.

Analysts attribute the outperformance to two main factors:

• Expectations of a spot ETF for Ethereum: Investors believe that the launch of an ETF would make it easier and safer for institutional investors to invest in ETH, which could lead to increased demand for the cryptocurrency.
• Launch of important network upgrades: In January, Ethereum began testing the EIP-4844 upgrade, which is designed to reduce transaction fees and increase network capacity. This upgrade could make Ethereum more attractive for use in a variety of applications, which could also boost demand for ETH.

ETF Expectations

In November 2023, BlackRock filed with the U.S. Securities and Exchange Commission (SEC) to launch a spot ETF for Ethereum. This application has been met with optimism from investors, who believe that approval is likely.

In January, the SEC approved the launch of 11 spot ETFs for Bitcoin. This was a positive development for ETH, as investors saw it as a sign that U.S. regulators are gradually becoming more accepting of cryptocurrencies.

Network Upgrades

The EIP-4844 upgrade is expected to be completed in the second half of 2024. This upgrade would add a new type of transaction that allows for larger data sizes. This could make Ethereum more attractive for use in applications that require the storage of large amounts of data, such as decentralized finance (DeFi) and non-fungible tokens (NFTs).

In general, Ethereum appears to have good prospects for further growth in early 2024. Expectations of an ETF and the launch of important network upgrades could lead to increased demand for ETH, which could in turn drive up the price of the cryptocurrency.