I’ve been watching this actively, and have a few theories:<p>The last major forks (ETH:ETC, BTC:BCH) both created net positive value; that is, the total value held after the split was greater than the value of a single chain.<p>So, I think the so-called ‘smart’ money ahead of the fork has been to buy BTC, since history seems to show it will be worth more post-fork. Fork looks more likely -> more buying.<p>And of course the rising price creates its own momentum. There are three general outcomes from the fork: one or the other side ‘wins’, and there’s a shit-chain spawned, or they both coexist.<p>In the coexist world, we have a pretty interesting set of market moves ahead; if the debate is as divisive as it looks on twitter, then the whole crypto world will be holding ‘shit coins’, but not ones others think are shit, along with their preferred fork.<p>It seems possible that they may turn some of those into Ethereum, and it seems likely to me that some traders will ‘get back’ to Ethereum post-fork; all those would indicate some cautious optimism about ETH prices later this fall.<p>And of course if BTC just totally nukes itself, then I think you’d see a major flippening back to ETH.
Firstly Ethereum could only be considered "stagnant" from a price perspective as a great deal of development is definitely ongoing.<p>So a better question might be: why is Ethereum not experiencing the same levels of hype and price growth as Bitcoin right now?<p>My guess would be that rising ICO anxiety is causing enough flight from Ether to other currencies to suppress any hype-induced price bumps.
Supply and demand.<p>There is no limit on the supply of ETH, whereas there will only ever be 21 million bitcoins in existence.<p>It doesn't make sense to speculate on the price of ETH, because it's never going to be scarce. Even the current price of ETH makes no sense, except you need it to buy into ICOs.
I think there's a straight forward explanation. Bitcoin has fundamentally proven its stability this year. It's already had one fork and China cracking down on it hard. It was a major test for Bitcoin and the net result was Bitcoin came out literally stronger than ever after a drop that was, in hindsight, just a blip. If that news didn't trigger a devastating sell off it's somewhat difficult to imagine what would.<p>Another key point is that Bitcoin also has inherent value as a currency. You can pay for things easily and quickly <i>directly</i> with Bitcoin in an increasing number of places. Should somewhere like Amazon decide to start directly accepting Bitcoin, the price would go through the roof.<p>And one more debatable issue is that Bitcoin is in a way a sort of metronome or heartbeat for cryptocurrencies as a whole. Almost like a reserve currency. If Bitcoin fails, it would likely have a devastating ripple effect throughout the entire crypto community. "If Bitcoin fail - anything can fail." is something that would likely be uttered rapidly in response to any other crypto. So an investment in Bitcoin can in a way be seen as an abstract investment in cryptocurrency itself. If you accept this, then the corollary is that other coins are indirectly marked against Bitcoin. So you would be implicitly taking on additional risk for unclear gains.
Because the people buying it and driving up the price don't care about block chain or alternate economics or anything like that. It looks like stock that keeps going up. Plenty of people are buying it purely as an investment.
I'd say two things at this point in time:
1) All-time high, it's pre-fork time, Bitcoin is still a long position, so people who have a lot of cryptocoins are trying to expand their portfolio BTC %. And all new investors are coming to BTC. ETH, like every other altcoin right now, is being traded in favor of BTC, so no way value will go up pre-B2X.
2) ICO banning, regulations, and general uncertainty at new coins make Ethereum & ETH, as far as price speculation goes, a less favorable proposition, since its speculative driver (ETH for ICO) lost momentum. IMHO it's remarkable the ETH/USD price is still stable, hovering at US$300.
It's meaningless to speculate on these short-term price movements.<p>There's a possibility that the pricing is being determined by macroeconomic forces, but then it seems like you'd see price movement in traditional commodities as well (like gold) and we're not seeing that. In all likelihood this is the combination of some set of factors -- the CME group's involvement or more people looking to enter the market, etc., and Bitcoin's preeminence in the cryptocurrency space.<p>There's the movement of Bitcoin Cash, which is going up at an even faster clip (now) after stagnated for a while after the post-fork excitement. This is not obviously connected to any of the CME-based news.<p>Most likely is that each coin is acting somewhat independently. As much as you can say that Ethereum is stagnating, it's not stagnating any more than Bitcoin was a year or so ago.<p>Only time will tell if the current pricing changes are reflecting some deeper reality, but I'd hesitate before attributing anything like that until we have more information.
Not a very scientific theory, and not much collected evidence but based on my observations Bitcoin get's much more press, more people know about it and want to buy it. It's all very speculative. To say 1 bitcoin is worth 7000 USD is the same as saying I can manage to sell all my bitcoin for that much which is likely not the case. As with all assets, the moment a major player loses confidence and signals such in the market, there will be a sell off and major crash in the value.<p>EDIT: anectodal evidence, this week more than 10 non-tech people who ask me for investing advice asked "should i buy bitcoin". The moment non-experts begin to ask if they should be buying something is generally a good signal that something is bubbling
Ethereum just had a hard fork where a ,,quick patch'' for a bug was created 2 days before the fork. The developers didn't agree if there should be a hard fork or no at that point. I would never put my money on a system like this, and I would never roll out a system like this where I can make tens of billions of dollars of damage so easily.<p>Also people who were using an official Ethereum multi-sig wallet to be extra safe lost real money, because the devs don't even bother testing the smart contracts that they provide (while Bitcoin devs just created a language from ground up that allows proving properties of smart contracts)
Because BTC has had many changes in available supply. With BCH and 2X a lot of people that otherwise would happily hold their coins in cold storage have been "forced" into moving their coins around for "flippening" of the forked coins.<p>Also consider that a very large amount of coins was seized when BTC-E (corrupt exchange working with criminals) and AlphaBay (defunct darknet drug website) were shutdown around the same time. It's not just the capital that was seized (and is still be processed by many governments that co-operated) but also the flow of money that was interrupted.
I would say brand recognition among amateur investors. Amateur investors, just like in the dot-com era, drive huge upsurges in prices, and tend to be indicative of the late stages of a bubble. Even Richard Shiller though, a really brilliant economist, does not even try to attempt when bubbles will "pop", but a good rule of thumb is they don't last longer than 10 years. It's hard to argue when this all started, but if you date the rise of the "start-up era" (which I am lumping in here with bitcoin) to say 2010, that gives you about 2 years max.<p>BTW this was all very common in the 90's with the rise of day-trading. People would literally give a company 50k and they'd be given a terminal at some rent-a-office to start trading (but with their own money not the firm's!!!).<p>One guy lost so much money, he killed as many people as Columbine: <a href="https://en.wikipedia.org/wiki/Mark_O._Barton" rel="nofollow">https://en.wikipedia.org/wiki/Mark_O._Barton</a>. I wonder if this will happen again.
Ethereum is stagnant because it's no longer profitable to mine with a GPU as it was during the summer.<p>Bitcoin is rising because it's about to fork.
This is my theory - Proof of Stake.<p>Ethereum is going to hard fork (whenever they can figure out) to a proof of stake model - CASPER.<p><a href="https://www.coindesk.com/shifting-changing-ethereums-casper-code-takes-shape/" rel="nofollow">https://www.coindesk.com/shifting-changing-ethereums-casper-...</a><p>This means that there is no serious investment on the farm side of things. No chinese miners running to invest millions of dollars to build mining farms.<p>To a large extent ETH is centralized in its stewardship through Buterin. So, the whole ecosystem is holding its collective breath. The next phase of growth (or fall) will only come after CASPER.
I'm surprised nobody has mentioned the CME news: <a href="http://www.cmegroup.com/media-room/press-releases/2017/10/31/cme_group_announceslaunchofbitcoinfutures.html/" rel="nofollow">http://www.cmegroup.com/media-room/press-releases/2017/10/31...</a><p>(My own explanation is that it's all a big speculative bubble and price moves are essentially momentum on top of noise, but nobody came here to read that :))
My theory is that ETH is a useful medium of exchange for buying compute resources from "the world computer", but BTC is better as a store of value. And the dollar continues to be better than both of them as a unit of account.<p>Basically, competing forms of money are breaking down into specialized kinds of money. Automatic atomic swaps between blockchains will make the specialization even more obvious over time.
Market value is based mostly on emotion. A lot of people buying into the hype have heard of BTC, but not as many have heard of ETH.<p>People are mostly buying it to resell it. BTC price goes up because BTC price is going up. ETH price is not going up because it's not going up.<p>Sometimes the inferior technology wins too as long as it's been adopted more widely. Cryptocurrency value is based heavily on network effects.
Bitcoin is still the word most strongly associated with blockchain. So whenever someone wants to make money off that new blockchain thing Chad made a million buying, they default to Bitcoin.<p>Then Phil and Susie also made money since Tammy and Jeff bought in as well, so Tom and Jennifer buy it too. Etc.
Does nicehash have an effect on how alt coins are priced compared to bitcoin. It's a market where you mine altcoins for bitcoins. Not sure how large it is, but wondered if it was affecting the relation to prices.
No different than asking "Why is the internet service Facebook growing but the internet service Twitter isn't?" or "Why did the internet website Facebook grow but the internet website WebVan didn't?" Bitcoin and Ethereum serve different purposes (a store of value and maybe a currency vs. a computing platform, respectively).
Ethereum has no defined use case, bitcoin is at the least a store of value. ETH is no different to LTC, NMC or any of the myriad other alt coins. You would be better asking why LTC is stagnant rather than ETH. Further ETH is an unlimited coin so it could never see the scarcity that BTC has built in to it.