Why is Ethereum abandoning Bitcoin and running away?

According to the latest report from Coinmetric, Ethereum has an average of 6.1074 million active addresses per day in the past 100 days. The bullish sentiment of Ethereum is obvious from the indicators and on-chain indicators. Bitcoin has been weak in rebounding after last week's sharp drop and is hovering around 54,000. According to data from Coingecko, Ethereum has risen 15% in the week ending Wednesday. It has risen about 260% from the beginning of the year to this year. In contrast, Bitcoin has risen only 87%.

Why is Ethereum leaving Bitcoin behind and running wild?

First, institutional funds are flowing in. According to a report by Bloomberg on Tuesday, the European Investment Bank (EIB) will issue a batch of two-year notes worth 100 million euros on the Ethereum network. The growing interest of banking giants such as JPMorgan Chase and UBS in the Ethereum blockchain network is also boosting the surge in Ethereum prices. ConsenSys, an Ethereum development and operation company headquartered in Brooklyn, New York, raised $65 million in mid-April from financial institutions JPMorgan Chase, Mastercard and UBS Group, as well as leading companies in the field of decentralized finance (DeFi).

ConsenSys chief economist Lex Sokolin also told Business Insider: "We believe Ethereum will develop into a global digital economy that solves all types of value transfers in the world, including an important part of traditional financial services."

Rapidly rising prices could mean higher liquidity and volatility for Ethereum. Based on current network activity, Ethereum's bull market network will be much busier than in 2017. Over the past 100 days, an average of 3.96 million ETH has been transferred by smart contracts every day. Another indicator of growth is the increasing amount of money flowing into Ethereum. Currently, only 8% of Ethereum users hold Ethereum for less than a month, but they can still share in the benefits of rising Ethereum prices. More loyal holders also mean that users will pay more attention to the development and application of the network instead of just speculating blindly. Then it will not be difficult for Ethereum to break through $3,000 in the short term.

Ethereum's falling gas fees are also helping to boost prices. High gas fees have been the Achilles' heel of the Ethereum network since last year's DeFi summer boom. These problems have been alleviated to a certain extent by the Berlin upgrade, which mainly optimizes Ethereum's mainnet performance, optimizes contracts, covers gas efficiency, updates to the way the Ethereum Virtual Machine (EVM) reads code, and prevents denial of service (DDOS) attacks. Interestingly, according to network data provided by Glassnode, the problem was reversed after the network upgrade. After a long period of average gas fees exceeding 100Gwei, Ethereum's average gas fees are falling sharply this week. In the past few days, the average gas fee has dropped to around 60 to 75Gwei, which has to be said to be the long-awaited manna for Ethereum users.

We can also get a glimpse of this from the Ethereum transaction volume on Uniswap. Due to the significant reduction in transaction costs, Ethereum transaction volume surged to 213,000 transactions per day this week, a record high. From the overall trend of transaction volume on Uniswap in 2021, it has been growing steadily, and this upward trend may continue in the coming months.

Ethereum's price trend was highly correlated with Bitcoin for a long time, rising and falling together. However, this trend was completely ended when Bitcoin plummeted on April 17. Bitcoin has been sluggish since then, even falling below $50,000. Ethereum, on the other hand, has set new highs. Currently, Bitcoin is in a slump, and a large amount of funds are flowing out to other tokens, with Ethereum being the first to be affected.

Cobra, co-owner of the Bitcoin.org website, said as early as last year that Ethereum would shake investors' confidence in Bitcoin, and now this concern may be about to become a reality.

Ethereum's network upgrade is still ongoing. After the Berlin upgrade, Ethereum will also usher in the London upgrade (expected in July) and the Shanghai upgrade (expected in October) in 2021. The London upgrade will deploy the controversial EIP-1559 on the main network. Since the London upgrade is more difficult and the implementation and testing time are shorter than previous upgrades, the core developers are trying to narrow the scope of the London upgrade so that it can be completed on time. As the Ethereum network ecosystem becomes more complete and the system efficiency improves, Ethereum may really lead the crypto market into a new future.