Bitcoin surpasses Ethereum before the merger

Bitcoin has overtaken Ethereum in recent days in terms of gains, even as the number two blockchain prepares for its biggest ever upgrade. Ethereum’s long-awaited upgrade to Proof-of-Stake is approaching, but Bitcoin continues to take center stage.

Bitcoin extended its gains on Monday, currently trading at $22,229. Ethereum, meanwhile, is changing hands for $1,715 after suffering a 3.3 percent drop. The second cryptocurrency’s correction comes as the “merger” is closing in and stocks are trading in the green to start the week. (The S&P 500 is up 0.74%, the Dow is up 0.54% and the Nasdaq is up 0.55%).

Bitcoin has shown strength since breaking support at $18,600 on Wednesday; BTC has since climbed nearly 20%. The weekly RSI also shows bullish divergence for the first time since March, and the monthly for the first time since September 2021.

Interestingly, the ETH:BTC ratio has been trending lower after peaking at 0.085 on Wednesday. It is now trading at 0.077, down 9.2%. The ratio had already touched 0.053 in June before ETH led a market-wide rally; for ETH:BTC to return to the low end of its range, it would have to fall another 33.49%. “The ratio refers to the amount of ETH it takes to buy one BTC. With a ratio of 0.077, one BTC is worth about 13 ETH.

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According to TradingView, BTC’s overall market dominance (indicating the largest crypto’s share of the global crypto-currency market capitalization) has also increased to 41.28% since reaching its multi-year support level of 39.79%.

The Merge: from Proof-of-Work to Proof-of-Stake

Ethereum’s decline relative to Bitcoin comes despite growing anticipation of its biggest upgrade in history.

This week, the blockchain will “merge“from Proof-of-Work to Proof-of-Stake, which will result in a 99% reduction in energy consumption and a 90% reduction in ETH emissions. The merger is expected to ship early on September 15, but ETH has yet to recover its August high of $2,015.

While the merger will result in a reduction in supply that could have a positive impact on the ETH price in the long run, it is possible that the merger could become a “sell the news” event that results in a sell-off after the fact. BitMEX CEO Arthur Hayes told Bankless last week that he was optimistic about how the merger could affect the ETH price, but he admitted that it could suffer in the short term if investors sell on the news of the merger. Such events are common in the crypto space. Bitcoin touched a high of nearly $65,000 for months on April 14, 2021, when Coinbase held its initial public offering on Nasdaq, before crashing for weeks. Dogecoin, meanwhile, took a big hit after Elon Musk performed a highly anticipated “Dogefather” skit on Saturday Night Live on May 8, 2021. It has yet to regain its highs.

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With Bitcoin’s growing dominance and the ratio between the two major crypto assets also on the rise, Ethereum could find itself overshadowed before its biggest ever upgrade. If that’s the case, there may not be a “flippening” on the horizon after all.

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