Standard Chartered: Ethereum's Turn to Outperform as Bitcoin Slips

When Strategy disclosed on Monday that it had sold Bitcoin, the move marked a counterintuitive turning point for Ethereum, according to Standard Chartered's Geoff Kendrick. Although the second-largest digital asset by market cap has lagged its oldest peer for months, investors' reaction to Strategy's liquidation created favorable conditions for Ethereum that could persist, the bank's head of digital asset research shared in a Tuesday note.

After Strategy shaved its stockpile by $2.5 million, Ethereum notched one of its largest price moves against Bitcoin in years, Kendrick wrote. Since the start of 2024, Ethereum has registered better daily gains relative to Bitcoin on the days it falls, just 23 times, he added.

By year's end, Kendrick argues that Bitcoin's dominance over Ethereum will weaken to levels not seen since September, or 0.04. Assuming the larger asset remains unchanged, Bitcoin would be worth $67,300, while Ethereum would have risen 41% to roughly $2,700 from $1,900.

Kendrick noted that Strategy's sale highlighted a distinct business model among Ethereum-buying and Bitcoin-buying firms. Companies can stake Ethereum to earn rewards by participating in the process of validating transactions, effectively generating revenue. Compared to Bitcoin-buying firms, that reduces the need for any sales, he wrote.

Last week, the investment bank projected a year-end target of $4,000 for Ethereum, contending that the digital asset's price doesn't reflect improving internal metrics. Kendrick compared the disparity to Amazon's tumble amid a catastrophic end to the dot-com bubble.

Kendrick's analysis specifically looked at the "ETH/BTC" ratio. The ratio peaked last year in August at 0.042 as Ethereum hit an all-time high of nearly $5,000, but historically, the asset built around the concept of smart contracts—which hold the code to power everything from tokens to decentralized apps and NFT projects—has trended relatively lower since 2022.

Shares in Bitcoin-buying behemoth Strategy (MSTR) fell more than 9% on Tuesday, continuing a slide following the firm's $2.5 million BTC sale disclosed on Monday. The firm's shares closed at $136.08, now down nearly 15% in the last five trading days and more than 23% on the month. Its precipitous fall coincides with a steep drop in the price of Bitcoin, which has fallen around 5.8% in the last 24 hours, recently changing hands at $67,288 and more than 46% off its all-time high mark of $126...

Kendrick wrote, however, that Ethereum is poised to benefit from Wall Street's growing interest in stablecoins as modern money and tokenization as new market plumbing. Ethereum's grip in those sectors has been recognized by asset managers such as BlackRock. Kendrick has penciled in $40,000 for Ethereum by the end of the decade, while he expects Bitcoin to rise to $500,000 over the same period.

In past crypto market cycles, Bitcoin's rally to all-time highs has been followed by a period of sustained outperformance for altcoins, a phenomenon known as "alt season." Still, some analysts have poked holes in the longstanding dynamic, placing emphasis on a market structure for Bitcoin that has matured through the introduction of exchange-traded funds.

The crypto market is having a rough June. Bitcoin opened today at $71,305 and skidded to a low of $66,948 before settling around $67,287—down 5.65% in a single session and at its lowest point since April. The broader crypto market is bleeding with it, and the macr