Crypto Price Prediction: Is Ethereum About To ‘Flip’ Bitcoin?

Bitcoin’s price rally has stalled after a blistering start to the year with ethereum, the second-largest cryptocurrency after bitcoin, also falling sharply from its peak.

The bitcoin price has lost a third of its value since soaring to almost $65,000 per bitcoin in April while the ethereum price has crashed by almost 50% from its mid-May high—though ethereum’s rally has dwarfed the bitcoin price surge over the last 12 months.

As Wall Street giants and retail investors flood the crypto market, traders are trying to predict whether ethereum will continue to outperform bitcoin—with $100 million digital asset investment manager Two Prime’s chief investment officer forecasting ethereum will eventually “flip” bitcoin.

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“In the long, long, multi-year timeline, yes, ethereum will flip bitcoin,” says Two Prime’s Nathan Cox. “It’s just now starting to be understood by the second-tier adopters. Ethereum’s utility alone will outstrip anything else.”

Bitcoin, at a price per coin of $40,000, has a market capitalization of around $750 billion, while ethereum, at $2,500 per ether token, is worth a combined near-$300 billion. However, ethereum has closed the gap on bitcoin over the last year, surging 1,000% compared to bitcoin’s 300% rally.

The ethereum price has broken out this year in part due to the soaring popularity of decentralized finance (DeFi)—using cryptocurrency technology to recreate traditional bank products such as loans and insurance and built on top of ethereum’s blockchain. Meanwhile, the NFT (non-fungible token) craze that has seen all manner of memes, digital artwork, tweets and YouTube videos sold via ethereum’s blockchain has further boosted demand for ether.

“Bitcoin is digital gold but ethereum is digital oil,” says Cox. The Caymen Islands-based Two Prime, which offers investors exposure to bitcoin and ethereum via its funds and has a target of $250 million assets under management by the end of the year, has launched a liquid yield fund to diversify from fixed income.

“Our outlook is bullish overall,” says Cox, pointing to El Salvador’s plans for widespread bitcoin adoption throughout the country as “more significant” than originally thought. “The majority of the pain of this pullback has probably been experienced already.”

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Meanwhile, others in the cryptocurrency industry remain upbeat despite significant pullbacks for bitcoin and ethereum.

“Sentiment towards the king of crypto continues to shift into positive territory,” Paolo Ardoino, the chief technology officer at British Virgin Islands-based bitcoin and cryptocurrency exchange Bitfinex, said in emailed comments, warning that the likes of Tesla billionaire Elon Musk and high-profile investors such as renowned hedge fund manager Paul Tudor Jones are still wielding outsized influence over crypto prices.

This week, Tudor Jones gave the bitcoin price a boost when he said he was targeting a 5% bitcoin allocation, up from just 2% previously.

“While the past few days have shown once again that celebrities and the movers and shakers in the space can impact the price, this will not last forever,” said Ardoino. “The momentum that has won bitcoin increasing recognition as an asset class continues to gather pace.”


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Ethereum price bounce to $2.6K fails to excite neutral-to-bearish pro traders

While speaking at the Virtual Fintech Forum in Hong Kong on May 27, Ethereum co-founder Vitalik Buterin commented on obstacles related to the Ethereum 2.0 rollout. Buterin said that there had been several internal team conflicts in the past five years and as a result, he confirmed that Ethereum 2.0 launch is unlikely to occur before late 2022.

In a May 22 report from Goldman Sachs, analysts said that Ether has a “high chance of overtaking Bitcoin as a dominant store of value.” Furthermore, the report noted the growth of the decentralized finance (DeFi) sector and the nonfungible token (NFT) ecosystems being built on Ethereum. Coincidentally, on the very next day, Ether’s price bottomed at $1,750.

On June 14, CoinShares released its weekly fund flows report and Ether investment products had the largest outflows, totaling $12.7 million.

However, the upcoming $1.5 billion options expiry on June 25 could be a turning point for Ether, according to Cointelegraph. This figure is 30% larger than the March 26 expiry, which took place as Ether’s price plunged 17% in five days and bottomed near $1,550.

Despite flirting with $2,600 after a 12% rally over the past week, top Ether traders seem unable to change their neutral-to-bearish positioning according to derivatives data.

The 3-month futures premium is neutral-to-bearish

Normally, Tte 3-month futures will usually trade at a premium to regular spot exchanges. In addition to the exchange liquidity risk, the seller is postponing settlement and usually charges more.

The 6% to 17% annualized return on stablecoin lending indicates bullishness whenever the 3-month premium trades above that range. On the other hand, when futures are trading below the stablecoin lending rate, it is a signal of short-term bearish sentiment.

Huobi ETH Sept. futures premium vs. spot market. Source: TradingView

As shown above, the 8% premium — 26% annualized — vanished on May 13, indicating extreme optimism. Since then, it has been ranging near 2.8%, which is equivalent to 10% annualized. Thus, top traders are neutral-to-bearish according to this indicator as it nears the lower level of the expected range.

The options skew shows moderate signs of fear

The 25% delta skew compares similar call (buy) and put (sell) options and will turn positive when the protective put options premium is trading higher. Whenever this metric surpasses 10%, it is considered a “fear” indicator.

The opposite holds when market makers are bullish and this causes the 25% delta skew indicator to enter the negative range

Deribit Ethereum options 25% delta skew. Source:

From May 20 to June 8, the indicator stood near 10%, indicating a higher protective put premium, which is usually a ‘fear’ indicator. However, over the last week, it has slightly improved to 7%, within the “neutral” range, but still close to bearish sentiment.

There is no evidence of bullish growth in top traders’ confidence as Ether tests the $2,600 resistance. So until those indicators flip to neutral-to-bullish, traders should act with extreme care before concluding that a bull run is in place.

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph. Every investment and trading move involves risk. You should conduct your own research when making a decision.