The original post: /r/cryptocurrency by /u/erjo5055 on 2024-12-05 21:33:36.
We all know how BTC and ETH historically perform during Bull Runs. BTC leads the charge, tops out, then ETH pumps. But what’s different this time?
ETH Is now deflationary, while BTC remains inflationary
Historically, ETH has had a much higher inflation rate than BTC, leading to lower price appreciation during bull runs due to greater increase to supply and lack of scarcity.
Remember price is a function of supply and demand which is why halving events correlate with price appreciation.
Dec 2017:
BTC Inflation Rate: 4.39%
ETH Inflation Rate: 10.59%
Inflation Margin (difference): 6.20% in BTCs favor
Dec 2021:
BTC Inflation Rate: 1.86%
ETH Inflation Rate: 5.20%
Inflation Margin (difference): 3.34% in BTCs favor
Dec 2024:
BTC Inflation Rate: 0.87%
ETH Inflation Rate: -0.03% (Average since merge)
Inflation Margin (difference): 0.9% in ETHs favor
Conclusion: If ETH demand preforms the way it historically does relative to BTC, price appreciation relative to BTC should be greater this bull run, as this is the first bull run where BTCs supply will be increasing faster than ETHs.
Consider that for buyers relying on ETFs for crypto exposure, ETH is their only real exposure to ‘alt season’.
What are your thoughts?