On November 10, 2021, record highs of bitcoin and ether were recorded. BTC, which back in 2010 cost less than five cents per token, reached almost $69,000 by November 2021. As for ETH, which was trading at $11.16 in 2016, at its peaks it cost a little more than $4865 apiece in 2021.
However, on the same day when the leading cryptocurrencies reached their peaks, they closed below the lows of the previous session, forming “bearish” reversal patterns on the daily timeframe. By January, bitcoin and ether had fallen to 33,075 and 2,165 respectively, dropping 52.6% and 56% of the value.
Nevertheless, the two largest cryptocurrencies managed to recover from their lows at the end of January, while the growth of ether in recent weeks exceeds the success of bitcoin in percentage terms (although the latter remains the leader in terms of market capitalization, twice overtaking ether in this indicator).
Leading Cryptocurrencies have Broken Out of Converging Triangles
Despite the fact that as of April 7, the leading cryptocurrencies could not be called “growing”, they still broke out of their consolidation ranges.
On the weekly chart, you can trace a series of downward highs of bitcoin futures, starting on November 10. At the same time, the local minimum of January 24 was followed by a series of rising lows. Bitcoin has already broken through the first resistance level in the form of the highs of the beginning of February 2022 at $45,905, breaking out of the bearish model. At the time of writing, BTC futures were trading above $43,400.
Ether futures showed similar dynamics, rising above the peak of the beginning of February at $ 3,292 and breaking through the upper limit of the “wedge”. While on April 5, bitcoin was trading near the broken mark and has since fallen slightly, ether was about $ 160 higher than a similar milestone (although now it has also sunk a little).
Ether grew faster than Bitcoin
In the first quarter of 2022, bitcoin futures fell by only 0.73%, while ether losses amounted to 9.94%. The market capitalization of the entire class of digital assets at the end of 2021 was $ 2.166 trillion, and by March 31, 2022, the indicator decreased by 3.8% to $ 2.084 trillion. Thus, during the first quarter, bitcoin held the lead over ether.
However, during the rally from the lows of January 24, the ether was able to seize the initiative. While bitcoin futures rose by 39.9% (from $32,855 to $45,950), ether futures added 60.3%, strengthening from $2,158 to $3,459 by April 5.
Update 2.0 for Ethereum
Currently, the Ethereum network is preparing for the 2.0 update. One of the key points will be the transition from the Proof of work protocol (PoW) to the Proof of ownership protocol (PoS).
Bitcoin and ether networks are now working on the PoW principle, which involves competitive verification of transactions and calculation of new blocks. PoW is a very energy—intensive protocol because it requires significant computing power.
Proof of Ownership (PoS) is a more advanced mechanism for processing transactions and forming a blockchain. PoS allows cryptocurrency owners to participate in transaction verification and block calculations in proportion to their share in the total number of tokens. PoS requires much less energy consumption than PoW.
Perhaps the main reason for the advancing dynamics of the ether is precisely the upcoming update 2.0, which involves the transition to a more environmentally friendly PoS protocol. The Ethereum 2.0 network should be operational in June 2022.
Bitcoin Retains Leadership
However, bitcoin remains the main heavyweight of the digital currency segment.
Comparing the capitalization of BTC and ETH, comparing the capitalization of BTC and ETH
As you can see, ether lags far behind bitcoin in terms of capitalization. As of April 7, the capitalization of BTC was $ 826.49 billion and more than twice the market valuation of ETH at $ 387.65 billion.
Bitcoin and ether remain the leaders of the growing segment, currently represented by 18,713 altcoins. Only 19 currencies were able to overcome the $10 billion capitalization threshold, and BTC and ETH are the only cryptocurrencies worth more than $82.5 billion.
Ether is ready to challenge November highs
The breakdown of converging triangles by bitcoin and ether failed to launch a new rally. However, history shows that an explosive movement can begin almost at any moment (although rallies are often replaced by no less rapid sales).
If prices start to rise, a crowd of speculators is likely to return to the market. BTC and ETH attract demand as the most liquid and successful currencies.
In addition, over the past few weeks, the air has been showing outstripping dynamics. But it is worth remembering that “past achievements” do not guarantee a breakdown of peaks from November 10. However, from the point of view of technical analysis, I would not be surprised if I see another explosive rally of cryptocurrencies.