Cryptocurrency: prices of Bitcoin and Ethereum

Among the thousands of existing cryptocurrencies, the prices of Bitcoin and Ethereum are dominating the market at this juncture. 

In particular since the beginning of this year, it has been the price movements of BTC and ETH that have affected the crypto markets as a whole more than anything else. 

After all, together these two cryptocurrencies have a capitalization of more than 60% of that of the entire crypto market as a whole, and excluding stablecoins this joint dominance comes to more than 70%. It is enough to consider that the third real cryptocurrency by market capitalization, BNB, capitalizes less than a tenth of BTC and less than a quarter of ETH. 

Bitcoin’s price continues to lead Ethereum and other cryptocurrencies

Right now Bitcoin’s price is around $29,000. 

This is a lower price level than the 2023 annual high of more than $31,000 touched in mid-April, but it is not far from those highs. 

Not least because those highs were only recorded at a specific time this year, namely around the time of Ethereum’s Shapella update, when it was believed that prices would fall and instead went up. 

As it turned out, beginning 19 April, that price was the result of overly positive sentiment, so the current $29,000 is actually a decidedly high level for 2023. 

Although the current BTC price is 58% below the all-time high of November 2021, it must be said that the peak was touched thanks to the large speculative bubble that began to form in late 2020, so it is not a good benchmark. 

It is better to take as reference points the value before the financial markets collapsed in March 2020 due to the start of the pandemic, and the pre-bubble value of October 2020. The former was about $10,000 and the latter about $12,000. 

So the current value is almost three times that of February 2020, and almost two and a half times that of October 2020. 

In addition, during 2020 Bitcoin’s price also fell below $16,000, which is still a value higher than the two reference points of 2020, but almost half the current value. 

In fact, during 2023 the price of BTC has appreciated by about 74%, partly due to the rebound following the 2020 crash, and partly because it is broadly following the movements of 2019. 

Analysis of Ethereum’s recent performance

Something similar is happening to Ethereum as well, although during 2023 ETH’s price rose “only” 57%. 

This significant difference with Bitcoin seems to be mainly due to the fact that during 2022 ETH lost less than BTC. 

In fact, September of last year saw the Merge taking place, which ended the Proof-of-Work era on Ethereum by kicking off the Proof-of-Stake era. This resulted in ETH losing less than BTC in the second half of the year. 

While Bitcoin’s 2022 price low point was reached in November, after the collapses in May and June, Ethereum’s stopped in June, because it recovered significantly more than BTC between August and September. 

ETH’s current value is also below the 2023 annual peak of more than $2,100, and for the same reason as Bitcoin. 

However, there is a decidedly interesting difference. 

If Bitcoin’s price has now recovered almost all the losses accumulated after May 2022, i.e., after the bankruptcy of Celsius, Ethereum has not yet fully succeeded.

This makes it all the more likely that the reduced growth of the ETH price during 2023 is due to a minor rebound after a collapse of slightly lesser magnitude in 2022. 

Moreover, the current price of ETH is even lower than it was in August last year, precisely because it was overvalued then due to the anticipation of the Merge. 

The comparison with 2019

Bitcoin has a cycle of about 4 years due to halving. 

There have been 3 halving so far, and in all cases a big speculative bubble inflated the following year, which also affected the prices of other cryptocurrencies. All three bubbles then burst, resulting in a bear-market. 

While 2023 is the year following the last major post-bubble bear-market, 2019 was the analogue of the previous cycle, and was marked by three rises, one through April, one in May, and one in June. 

The rise in the prices of Bitcoin and Ethereum in the first four months of 2023 closely resembles the first rise in 2019, so much so that there is speculation that there may be two more this year as well before the second half begins. 

If a similar scenario were to occur, which is to say similar to what happened in 2019, we could expect a first further rise in Bitcoin’s price to $35,000, followed by a second above $40,000. 

However, there is no certainty that the similarities with 2019 will continue throughout 2023, but it remains plausible at the very least that it is primarily Bitcoin’s price trend that will influence that of other cryptocurrencies, even though in April it was Ethereum that made the difference. 

Nonetheless, it is possible that the first week of May may already provide clear answers on these hypotheses.