While Bitcoin recently lost some of its momenta with its price hovering around $40,000, its competitor Ethereum, which is expecting a revolutionary upgrade today, is showing a heavy increase in demand.
With its update around the corner, many have been worried about the increasing transaction costs. However, the Ethereum Improvement proposal – 1559 (EIP-1559) will hopefully offer deflationary pressure to the crypto asset due to improvement in the supply volume and fee system.
According to the monthly report by Kraken Intelligence, Ethereum’s growing demand over Bitcoin will likely continue, both technologically and financially. Kraken Intelligence is a newsletter from cryptocurrency exchange Kraken.
The report showcased a contrast in the demand between the two cryptocurrencies. It said:
“Looking at weekly fund flows into BTC and ETH investment products, we’ll find that although BTC attracted significant demand in April, its plunge in the following months resulted in significant outflows. Though ETH saw a similar trend transpire, ETH has only seen outflows in 6 of the last 12 weeks while BTC has seen 10 weekly outflows. While BTC’s year-to-date flows are down -5% from April, ETH’s flows are up +9%.”
Ethereum’s growing demand from both existing and new market participants is undeniable. DeFi, Non-Fungible Tokens, Ethereum shifting to Proof-of-Stake mechanism, and the launch of new upgrades are some of the reasons it has outperformed Bitcoin today.
The reports have predicted that Ethereum may continue to surpass Bitcoin. However, for it to do so, Bitcoin needs to remain in the bull market uptrend.