As we move into 2024, many crypto enthusiasts and investors are asking a critical question: Is it time to sell Ethereum for Bitcoin? Has Bitcoin permanently overtaken Ethereum in terms of long-term growth potential? With Bitcoin outperforming Ethereum by over 44% since the Ethereum Merge, it’s easy to see why the market is feeling the pressure. Let’s break down the current state of the ETH-BTC battle, uncover potential risks, and explore what lies ahead for these two top cryptocurrencies.

The Numbers: Bitcoin's Dominance Since the Merge

A crucial piece of the puzzle is the fact that Bitcoin has significantly outperformed Ethereum since the Ethereum Merge, which took place almost two years ago. According to data from ultrasound.money, Bitcoin has gained 44% more than Ethereum since that event, leaving some to wonder if ETH is losing its edge. At the core of this disparity is the fundamental difference in the supply dynamics between Bitcoin and Ethereum.

Bitcoin’s latest halving event, which occurred in 2024, has reduced the issuance of new coins by half. This means Bitcoin is becoming more "disinflationary" over time, with fewer coins entering the market. On the other hand, Ethereum's supply has been growing, especially following its latest upgrade—sometimes referred to as the “Denon” upgrade. The net result is that while Ethereum has burned more ETH than it has issued over long periods (a deflationary factor), in the short term, ETH's supply has increased, which some argue has contributed to its recent underperformance.

Is Ethereum Really Becoming Inflationary?

A quick glance at recent data shows that Ethereum’s supply has increased by almost 1 million ETH in the past year, equating to roughly 1% inflation. While this sounds concerning, it’s important to clarify a key point. Since the Ethereum Merge, total ETH supply has actually decreased by 0.08%. This highlights a mixed picture where short-term increases in ETH supply may be contributing to recent underperformance, but the long-term outlook still leans towards deflationary trends thanks to the introduction of Ethereum Improvement Proposal (EIP) 1559.

This distinction between inflationary pressures and deflationary trends is vital to understanding why Ethereum has underperformed recently but may still have room to recover in 2024.

Are Institutional Investors the Problem?

Beyond supply dynamics, the role of institutional investors and Ethereum ETFs plays a significant part in the conversation. Ethereum ETF flows have been highly negative, with net outflows surpassing half a billion dollars since the launch of ETH-based ETFs. Institutions like Grayscale have been offloading Ethereum holdings, with a staggering $2.6 billion in outflows since the ETF launch, significantly dampening the performance of ETH.

However, there’s a potential silver lining. BlackRock, the world’s largest asset manager, has brought in about $1 billion in Ethereum ETF inflows, signaling that there’s still strong interest from key market players. While Grayscale continues to sell, we could see a return to net buying once these sell-offs stabilize.

Can Ethereum Reclaim Momentum in 2024?

Now, the critical question: Can Ethereum regain its footing and outperform Bitcoin in the upcoming year? Historically, Ethereum has outperformed Bitcoin during bull markets, particularly in years following Bitcoin halving events. The argument here is that Ethereum’s vast ecosystem of decentralized finance (DeFi), NFTs, and smart contracts could drive its future growth. However, it’s important to note that ETH has consistently underperformed Bitcoin for the past three years, a trend that has investors worried.

Looking ahead, technical analysis suggests Ethereum is nearing a critical support level, but a breakdown could precede a major upward surge. In previous cycles, Ethereum followed this pattern—testing support and then seeing a significant "pump" in price action. Given the current market dynamics, some analysts are predicting Ethereum could see another price surge before the end of Q4 2024, provided that macroeconomic conditions remain favorable.

The Bold Price Predictions

For those looking to the future, there’s no shortage of bold predictions. The general consensus is that Bitcoin could 3x or even 4x in the current cycle, potentially reaching prices as high as $165,000. If Bitcoin hits these levels, Ethereum could reasonably be expected to reach about 8% of Bitcoin's value, translating into a price of $13,200 for ETH. However, psychological resistance around the $10,000 level is likely, meaning that ETH would need a very bullish environment to break through.

Why $13,200 Ethereum Isn’t Out of Reach

While $13,200 for Ethereum might sound far-fetched, history shows that ETH has made massive gains in bull market years, particularly after Bitcoin halvings. During the last bull cycle, Ethereum reached nearly 9% of Bitcoin's value, and in previous cycles, it touched as high as 15%. While those peaks might not repeat, an 8% ETH-BTC ratio is entirely possible—especially considering Ethereum’s continued role as the backbone of DeFi and NFTs.

Of course, the biggest risk factor here is the unpredictable nature of crypto markets. While many analysts are bullish on both Bitcoin and Ethereum, the possibility of regulatory hurdles, macroeconomic shifts, or unforeseen technological developments remains high. Anyone investing in ETH or BTC should keep these factors in mind.

Conclusion: Ethereum’s Fight Isn’t Over

Despite Ethereum's recent underperformance, the long-term potential for ETH remains strong. Ethereum’s unique position as the go-to platform for DeFi, NFTs, and smart contracts gives it a strong foundation to rebound, particularly if the macroeconomic environment improves in 2024. However, investors need to be cautious of short-term risks, particularly as ETH struggles with supply pressures and institutional sell-offs.

Ultimately, Ethereum’s journey in 2024 will depend on whether it can regain momentum, break through key technical levels, and continue attracting both retail and institutional interest. While Bitcoin may lead the charge, Ethereum's story is far from over.