Ethereum to Bitcoin Ratio Hits 2022 High in Merger Runup

The ETH:BTC ratio reached 0.084 on Tuesday.

Ethereum Rally Against Bitcoin

With “the Merge” now days away, Ethereum is rising against Bitcoin.

TradingView data shows that the ETH:BTC ratio climbed to a 2022 high early Tuesday, topping 0.084 for the first time since December 2021. The ETH:BTC ratio has jumped around 58% from around 0.053 in mid-July. The “ratio” refers to the cost of 1 BTC in ETH terms. At a ratio of 0.084, 1 BTC is worth about 12 ETH.

Ethereum enthusiasts have discussed the relationship at length in the past in tandem with the “swing”—a hypothetical event that would cause Ethereum to overtake or “flip” Bitcoin’s market value. The ETH:BTC ratio peaked at 0.1 back in June 2017 and January 2018, but for the reversal to happen it needs to reach about 0.159 based on the current circulating supply of both assets (as the ETH and BTC coin supplies adjust over time, the ratio also changes).

Ethereum’s current lead against Bitcoin can be explained by growing hype for Merge, the second blockchain’s long-awaited Proof-of-Stake upgrade. The Merge is set to air sometime between September 13 and 15, with the first part of the event taking place today. Called Bellatrix, the first step in the upgrade will see Ethereum update its consensus layer before the actual merge. The second phase, known as Paris, will then be completed when the Terminal Total Difficulty threshold reaches 58750000000000000000000, marking the difficulty required to mine the final block under Proof-of-Work. After that, all new Ethereum blocks will be added to the chain by validators staking ETH.

The market is waiting for the merger

After suffering years of delays, the merger is expected to be the biggest crypto event of 2022. It is going to bring several major changes to Ethereum, including a 99.99% reduction in energy consumption and a 90% cut in ETH issuance. That’s partly why ETH has rallied in recent weeks. The interest surrounding the update is such that many Ethereum-adjacent tokens, including the likes of Ethereum Classics ETC and Lido’s LDO, have rallied alongside ETH in recent weeks. Ethereum Classic has benefited from miners moving over to the network before becoming obsolete on Ethereum; The hash rate hit a record high on Monday. A group of Proof-of-Work advocates also plan to split Ethereum to create a new network that maintains a hub for miners. The initiative, known as EthereumPOW, is expected to follow the merger, and could potentially lead to an airdrop of tokens on the new chain for ETH holders. Several major exchanges, including FTX and Binance, have confirmed plans to support airdrops in addition to the merger.

Per CoinGecko data, ETH was trading at $1,664 at press time, up about 6.2% in the past 24 hours.

Disclosure: At the time of writing, the author of this piece owned ETH and several other cryptocurrencies.