September 19, 2021

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

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

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

Long-term leadership of bitcoincan 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 the price. market capitalization decreased to $ 639 billion. At the same time, the share of Ethereum increased and reached $ 248.9 billion, even though the negative background from China affected its course.

Flexibility and adaptation as factors of long-term success

The main prerequisite for the sustainability of capitalizationthe second most popular cryptoasset is its development as an ecosystem. Bitcoin still continues to be in the laurels of the firstborn and receives its dividends from this. However, BTC unfortunately stalled at the stage of the transactional system, while Ether is receiving support from investors due to its developed infrastructure and flexibility.

ETH is now both decentralized finance andthe ability to attract funding, 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 already in August, which aims to reduce commissions 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 alternative possibilities of digital assets.

Sustainability and continuous development

Bitcoin faced what it couldn'tdeploy the idea of ​​a cryptocurrency, stuck exclusively on a payment service. On the horizon of the next two to three years, if there are no dramatic changes, it is likely that ETH can 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 significantly outstripped 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, having strengthened by only 15%.

And finally, thirdly, it is a decrease in addictionEthereum networks from mining. Bitcoin suffered heavy losses due to the fact that China tightened its policy in relation to miners, reducing the power of the network, collapsing the hash rate, and, as a result, pulling quotes down. Ethereum has protection against these kinds of challenges, therefore, from the point of view of the evolution of digital assets, today it has a great chance of leadership, while Bitcoin's opportunities are gradually dwindling.