Ethereum is poised to shine again, says Steno Research

Market research firm Steno Research stated in a report on Thursday that Ethereum's (ETH) recent underperformance may be coming to an end, with the cryptocurrency set to regain its shine, both in terms of fiat price growth and relative to Bitcoin (BTC).

Ethereum's price surged from $2,280 at the beginning of the year to $4,090, but has retreated back to between $2,100 and $2,800 over the past six months, resulting in a year-to-date gain of approximately 11%. Bitcoin, on the other hand, has seen a 50% increase in price this year, reaching a high of $74,000. The ETH/BTC ratio has been on a downward trajectory since the Ethereum Merge in 2022, falling by more than 50%.

Image: ETH/BTC ratio since 2020 (Source: Steno Research)

Steno Research's report highlights Ethereum's performance during the previous bull market as a potential indicator. During the altcoin season, Ethereum's value more than doubled against Bitcoin in less than two months. The report attributes this shift to a surge in on-chain activity, including the burgeoning of decentralized finance (DeFi), stablecoin issuance, and NFTs, primarily occurring on the Ethereum blockchain.

Steno predicts that the Federal Reserve's recent rate cut will lead to increased on-chain activity, which will benefit Ethereum significantly. The research firm also believes Bitcoin exchange-traded funds (ETFs) are unlikely to continue outperforming Ethereum ETFs, noting Ethereum's historical ability to suddenly outperform Bitcoin.

Steno's senior crypto analyst, Mads Eberhardt, identifies three main reasons behind Bitcoin's recent outperformance over Ethereum:

"The impact of US spot ETFs on both Bitcoin and Ethereum, MicroStrategy's continued buying pressure, and the notable decline in Ethereum transaction revenue in recent months."

Eberhardt notes that Ethereum's active addresses remain robust, especially considering the growing adoption of rollups. He adds that the network's transaction revenue seems to have bottomed in August.

Eberhardt wrote on social media: "Lower interest rates -> More onchain activity -> Greater Ethereum transactional revenue -> Lower ETH supply growth -> Higher ETH price."

[Tweet: "Lower interest rates -> More onchain activity -> Greater Ethereum transactional revenue -> Lower ETH supply growth -> Higher ETH price.
Let's go. pic.twitter.com/rr0o0WjJol"](https://twitter.com/MadsEberhardt/status/1836822587793625389?ref_src=twsrc%5Etfw)

Asset management firm Bitwise also shares a positive outlook for Ethereum. In a report published on Tuesday, the company stated: "Ethereum looks like a potential contrarian investment opportunity before the end of the year."

Source: Coindesk