Ether, the number two crypto, closes on bitcoin
Add Axios as your preferred source to
see more of our stories on Google.
Ether, which powers the Ethereum blockchain, has in recent weeks abruptly caught up to bitcoin's rally, driven by digital asset treasury companies accruing over 2 million ether since June.
Why it matters: In past bull markets, the prices of the world's two biggest cryptocurrencies have made very similar moves, but that correlation broke down quite a bit over the last year.
That break was notable. Prior to last year it had looked like all of crypto largely marched in lockstep with bitcoin, raising questions about whether any other project could differentiate itself from the original.
But then bitcoin went on a tear with the launch of ETFs in 2024, and also since President Trump began to promise to make the U.S. a leader in crypto.
- Ether also got an ETF and it also benefits from Trump's policies, but that wasn't showing up in its price.
Between the lines: Bitcoin and ether are very different assets: Bitcoin is just money. Ethereum is basically a giant tech company, except it doesn't have a CEO, office or a board.
- The Ethereum blockchain was built as a platform for decentralized applications, and any and all activity on the blockchain requires some kind of payment in ether.
- "Several of the biggest narratives that drove Ethereum's 2021 performance had decayed significantly in 2024, such as NFTs, web3, and metaverse," Alex Thorn, head of research at Galaxy Digital, says.
The intrigue: Over the past month, however, ether has benefited from some of the same factors that have been fueling bitcoin.
Driving the news: Ether decisively broke the $4,000 price barrier last week, a level it had only touched twice before — briefly — in the past three-plus years. Tuesday morning it was trading at over $4,400.
- There's been a lot of buying going on. Monday, more than a billion dollars worth of exchange-traded ether products were purchased, according to CoinShares. A record.
- Such purchases this year have already nearly doubled from last year.
What's happening: Certain companies pursuing a cryptocurrency accumulation strategy have started buying piles of ether, led by Bitmine Immersion Technologies (BMNR) and Sharplink Gaming (SBET).
- The theory of these companies is that they can accrue more cryptocurrency per share over time using financial engineering, without diluting investors.
- Which means that, hopefully, one purchase of stock will grow its holdings of an underlying cryptocurrency over time.
- Collectively, these companies are approaching 2% of the total supply under management, with a giant new purchase of 317,000 ether (ETH) announced by Bitmine on Monday.
A friendlier SEC also looks likely to approve ether ETFs, earning a small yield for token holders on-chain, which should make the products a bit more attractive to investors.
What they're saying: "For years, Ethereum has lived in the shadow of its elder sibling, Bitcoin," Houston Morgan, from multichain investing platform ShapeShift, says.
- "But that era is ending. ETH is on the cusp of stepping into its own spotlight. Ethereum price action is increasingly driven by its own fundamentals."
By the numbers: Bitcoin and ether have seen roughly similar gains since the start of the year, despite ether lagging for most of that period.
- However, ether has a ways to go to truly catch up. Bitcoin is closing in on 300% in appreciation since the beginning of 2024.
- Ether is close to doubling its price over the same period.
What we're watching: The market has begun to differentiate between the major cryptocurrencies, and despite ether's recent rise, that's expected to continue.
- "As the market matures, that correlation will deteriorate further," James Butterfill, the head of research at Coinshares, tells Axios.
In the meantime, ether remains 9% away from setting a new all-time high, but it's risen that much in the last few days.
- However, Bitcoin is about 3% away from setting its own fresh record.
