Ethereum begins to realize its leadership potential against the backdrop of conservative bitcoin

 

Yuri Mazur, Head of Data Analysis Department, CEX.IO Broker:

Bitcoin's Long-Term Leadershipmay be challenged by its main competitor – Ethereum. Back in April of this year, the market capitalization of the first cryptocurrency was above $1 trillion, while the total value of ETH tokens was $244 billion. Already in mid-July, that is, three months later, after a significant correction of digital assets, BTC lost about 40% of its price, an indicator market capitalization decreased to $639 billion. At the same time, the share of Ethereum increased andreached $248.9 billion, even though the negative background from China also affected its exchange rate. 

Flexibility and adaptation as factors of long-term success

The main prerequisite for the sustainability of capitalizationThe second most popular crypto asset is its development as an ecosystem. Bitcoin continues to enjoy its first-born laurels and receives its dividends from this. However, BTC has unfortunately stalled at the transaction system stage, while Ether is gaining support from investors due to its advanced infrastructure and flexibility. 

Now ETH – this  and decentralizedfinance, and the ability to attract financing, and blockchain solutions and much more. The flexibility of the project is also expressed in the desire to adapt to new challenges. For example, the boom in the DeFi segment has led to an increase in costs in the platform network, and an update is planned to be launched in August, which aims to reduce fees within the ecosystem. 

Thus, Ethereum is of interest to market participantsnot only as an investment-attractive digital asset, but also as a developing project demonstrating the alternative capabilities of digital assets. 

Sustainability and continuous development

Bitcoin faced the fact that it could notexpand the idea of ​​cryptocurrency, having stalled exclusively on the payment service. Over the next two to three years, unless any drastic changes occur, it is likely that ETH could take a leading position in the market. 

There are already indirect prerequisites for this, firstly,more stable capitalization of ether compared to bitcoin. Secondly, the growth rate of the token in 2021 has significantly outpaced the growth rate of BTC. According to the CEX.IO exchange, on July 12, the ETH rate was at $2,109, adding 186% to the opening price of the year. The growth rate of the first cryptocurrency over the same period of time is much more modest: from $28,951, digital gold rose to $33,527, strengthening by only 15%.  

And finally, thirdly, this is a reduction in dependenceEthereum networks from mining. Bitcoin suffered heavy losses due to the fact that China tightened its policy towards miners, reducing network capacity, collapsing hashrate, and as a result, pulling quotes down. Ethereum is protected from this kind of challenges, therefore, from the point of view of the evolution of digital assets, today it has a great chance of leadership, while the capabilities of Bitcoin are gradually drying up.