Bitcoin Could Boom 430% but Ethereum May Still Steal its Thunder

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Bitcoin believers may have new reason to rejoice following the stimulus checks, but Ethereum has use cases on its side.

U.S. President Joe Biden’s $1.9 trillion COVID Relief Bill has passed congress and stimulus checks are soon to be distributed. Early signs indicate recipients are ready to buy Bitcoin.

A survey by Mizuho Securities showed that out of 235 participants who expect to receive stimulus checks from the COVID Relief Bill, 10% are interested in investing in Bitcoin. It’s a small sample size, but according to the survey investing in Bitcoin was a more popular response than investing in traditional stocks.

If that kind of runaway popularity doesn’t move you in itself, consider that it could translate into $40 billion dollars running like a river directly from Biden’s $1.9 trillion stimulus package into Bitcoin.

In the same week, Bank of America strategists suggested to Bloomberg that the price of BTC can be moved 1% for just $93 million.

Bank of America strategists said in a note to Bloomberg on Wednesday: “Bitcoin is extremely sensitive to increased dollar demand. We estimate a net inflow into Bitcoin of just $93 million would result in price appreciation of 1%, while the similar figure for gold would be closer to $2 billion or 20 times higher. In contrast, the same analysis for the 20-year-plus Treasuries shows that multibillion money flows do not have a significant impact on price, pointing to the much larger and stable nature of the U.S. Treasuries markets,”

If you take the survey and projections on face value, you could surmise Bitcoin prices will be moved by over 430% by the influx of $40,000,000 flowing in from invested U.S. COVID Relief money.

See also: How to Buy Bitcoin (BTC)

It seems reasonable to expect the 12 month Bitcoin bull run to continue, making it the crypto success story of 2021, right?

DeFi Could Steal Bitcoin’s Thunder

Before the Bitcoin bull run, DeFi was a strong competitor as the most dominant story in crypto. BTC’s new price heights have made the world’s most famous cryptocurrency again the center of attention. Bitcoin may always be the star of the cryptoworld and certainly has seen wide popularity and acceptance as a store of value, but Ethereum’s fortunes have generally kept pace with and possibly exceeded Bitcoin since the end of last year.

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Since December 2020, Bitcoin has risen from over $28,000 to more than $58,000 (up roughly 207%). Ethereum has traveled from more than $746 to over $1800 (up roughly %240).

This week, Bank of America published a report titled “Bitcoin’s Dirty Little Secrets”. Excerpts from the report are unflattering to the world’s most famous cryptocurrency.

Some of the statements coming from the report include:

“The main argument for Bitcoin is not diversification, stable returns, or inflation protection, but sheer appreciation…”

“There is no good reason to own BTC unless you see prices going up…”

And they point out Bitcoin’s environmental impact is not desirable, stating: “we calculate that a $1bn dollar inflow into Bitcoin is equal to 1.2mn cars driven over the course of a year or 12.7mn barrels of oil.”

They go on to extol the virtues of Ethereum, stating in the report: “Bitcoin is the most talked about cryptocurrency but Ethereum [the blockchain] has more features, including being more flexible in its hosting of decentralized finance (DeFi) than the Bitcoin blockchain.”

“DeFi does, however, show the opportunity which (distributed ledger technology) offers to finance. We believe that one of the best differences against being disintermediated by DeFi would be mainstream finance grasping these opportunities.”

The Hopes and Fears of DeFi…

As a digital currency, Bitcoin is simply designed with a more limited range of use cases compared to Ethereum which has smart contract capabilities. Arguably, Ethereum is the needed sequel to Bitcoin’s success. But how will their performances compare in 2021?

“Bitcoin is the asset of choice for investors looking for a store of value investment characteristics in the cryptocurrency market. Success then is an ongoing price appreciation for this asset. And appreciate it will as long as investors continue to believe in the future of blockchain and cryptocurrencies. Ethereum, on the other hand, is not only a cryptocurrency. It is a network that supports smart contracts, Dapps (decentralized applications), and Defi (decentralized finance) projects. Investors that are looking to invest in up-and-coming tech should pay extra attention to this crypto asset. Over 41 Billion dollars is currently locked in DeFi projects on Ethereum blockchain compared with 4 Billion only 8 months ago. That’s what success continues to look like for Ethereum this year as well – ongoing expansion and innovation,” Tally Greenberg, Head of Business Development at Allnodes said.

Phase 0 of Ethereum 2.0 – known as “Serenity” – launched on December 1, 2020. The hope for this upgrade to the Ethereum network is meant to address the needs for speed, efficiency, and scalability.

“BTC is unlikely to be dethroned as the leading cryptocurrency, but the growth shown on the Ethereum blockchain is hard to bet against. They will naturally be compared ‘against’ one another although this makes little sense from a functional point of view since each is vying for separate and mutually beneficial use-cases. BTC’s ‘digital gold’ narrative is straightforward which is beneficial for attracting new users who may be intimidated by the apparently more complex and dynamically evolving ETH narrative,” Jason Peckham, Analyst at Invictus Capital said.

It remains to be seen whether Ethereum 2.0 will handle the need for speed to support the DeFi range of use cases.

“To me, Ethereum looks very attractive for long-term purchases, since it has a much greater technical potential for application than Bitcoin. The Ethereum blockchain programmability offers incredible growth opportunities. Bitcoin with its limited emission is rather a tool for saving and paying. Ethereum, in turn, is a tool for real usage of blockchain technology in third-party projects,” Dyanis Zabauski, CEO of Coinmatics said.

But nevermind the actual real-world uses – can Ethereum compete with Bitcoin’s price performance?

“I think it’s highly likely that ETH will beat BTC in terms of price performance in 2021… Ethereum has not fully realized the benefit from the growing popularity of DeFi services and NFTs. The exploding NFT market will directly benefit the value of ETH and I think that ETH has room to grow until its price encompasses the current excitement around NFTs,” Noam Levenson cryptocurrency writer and founder of Narrow Straight Writing.

Some experts point to lagging performance as a reason to keep an eye on Ethereum, as we may see much more movement in 2021.

“From a relative performance standpoint, ETH the second-biggest cryptocurrency is lagging Bitcoin up only 20% from it’s All-Time Highs vs Bitcoin 175%. In previous cycles, we have seen ETH catch up to BTC growth when BTC begins to correct because the profits taken from BTC are cycled into altcoins. Because ETH is one to two cycles back from BTC in its growth cycle it makes sense that return on the laggard would outperform the larger market cap of BTC from here,” Jake Wujastyk Chief Market Analyst at TrendSpider said.

Until Ethereum 2.0 is a known quantity, there will be doubts about its ability to meet the already tremendous need for bandwidth to support transactions.

“Ethereum might beat Bitcoin in terms of percentage gain this year. So far in 2021, ETH has increased by value by nearly 150%, while bitcoin has gone up around 90%. However, it is unlikely that ETH will take over in terms of market capitalization because bitcoin is the cryptocurrency with the most people behind it in terms of adoption and use. Many view bitcoin as digital gold and major corporations and institutional investors are adding it to their balance sheets. Ethereum is unscalable in its current iteration and acts more as a platform for decentralized applications than a store of value” Ben Weiss, president and COO of CoinFlip said.

The launch of an improved Ethereum network is a testament to the strength of the project – but also represents change. Change conveys risk – while Bitcoin is simple, immutable, and constantly rising in value.

“I am not yet convinced DeFi is as groundbreaking as its followers deem it to be. The idea of yield farming sounds a great deal like smart contract hot potato with investors jumping from project to project, hoping they aren’t the last ones to hold the bag,” Don Wyper, COO at DigitalMint said.

Institutional investors have been key to driving the value of Bitcoin over the past 12 months. Will those same traditional investing giants turn their attention to Ethereum?

“Eventually some institutional investors will acquire ETH in order to expand their crypto exposure, while others will trade the recently launched CME ETH futures (interest is still low with volumes 8% of the CME BTC Futures). Others will acquire ETH in order to utilize and experiment with some of the applications, particularly in DeFi. However, I don’t see much movement comparable to bitcoin in the near term,” Jason Lau, COO at OKCoin said.

Conclusion

As many respondents pointed out, comparisons between Ethereum and Bitcoin make sense from an investor point of view, but the comparisons don’t go much further than that.

“BTC and ETH are different: BTC is a currency token while the ETH is a utility token. If mainstream institutional investors get into ETH, it would mean that mainstream institutions validate not only the current value of ETH, but also the Ethereum ecosystem as a whole. We have not seen signs of mainstream institutions being involved in Ethereum’s applications. So, in order for institutional investors to get on board, it would take more time and market education throughout 2021 and beyond,” Haohan Xu, CEO of Apifiny said

It may take a shift in mainstream understanding – or even a mild learning curve – to get traditional investors who have tried the familiar Bitcoin to understand the power of DeFi, but it seems the mighty bull run market is raising all ships in the cryptoworld and institutional investors are already getting on board.

“Institutional investors are already getting on board with Ethereum. Just recently, Grayscale, the world’s largest Crypto asset manager, purchased more Ethereum than Bitcoin for a change. Chinese public firm Meitu also grabbed 15K of Ether not too long ago. Galaxy Digital’s ETH funds raised 32 Million in less than a month. The launch of Ethereum Futures on the CME, the launch of Canadian ETH ETFs, and we’re just scratching the surface here… I anticipate a further surge of institutional investments in Ethereum. This is just the beginning,” Greenberg said.

Cover image modified from photo by Mater Miliano from Pixabay

See more from Benzinga

Ethereum Mining Difficulty Registers a New As ETH Price Targets New ATH of $2500

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Ethereum network’s mining difficulty peaked to a new all-time-high 5,950,622,727,915,080, breaking the previous ATH of 5,946,888,973,277,870. The rising mining difficulty comes at a time when there is a lot of discussion around Ethereum’s rising gas fee and traders shifting to other platforms.

📈 #Ethereum $ETH Mining Difficulty just reached an ATH of 5,950,622,727,915,080 Previous ATH of 5,946,888,973,277,870 was observed on 16 March 2021 View metric:https://t.co/s9t4z9o8ba pic.twitter.com/WmUnPbib7y — glassnode alerts (@glassnodealerts) March 20, 2021

The on-chain metrics for Ethereum look quite strong as the demand for ETH around $1,800 price has been quite significant. ETH price has also seen a trend reversal with price narrowly missing the head and shoulder pattern formation followed by a bullish breakout which might help the second-largest cryptocurrency retest its previous ATH of $2,036. One analyst predicted that ETH could be well on its way towards $2,500.

Apart from growing demand, the increasing volume of ETH locked in ETH 2.0 mainnet could also lead to a supply crisis, and at a time when its institutional offering has just begun, the supply crunch could help its price further.

Altcoin Market Cap Nears ATH

Bitcoin’s massive growth this bull season has overshadowed most of the other developments as the top cryptocurrency more than tripled its 2017 high and its market cap reached the $1 trillion mark for the first time. Along with Bitcoin, the altcoin market has also grown to new highs and registered a new ATH of $684 billion.

The Altcoin market’s new ATH has propelled it to the same levels as 2017 and if it mimics the previous market movements, the market cap could grow exponentially. The fact that Ethereum and many other altcoins have already registered new ATHs, the next bull cycle could see these altcoins rise further as talks of Bitcoin being in a supercycle grow stronger.

Rekt Capital, a crypto analyst pointed out the recent altcoin market cap ATH and how it is at the same level as the 2016 post which the altcoin market cap registered a new ATH of $473 Billion. The 2017 high was first breached in early February and retested towards the end of the month. The month of March saw the altcoin market cap add another $200 billion to its 2017 high.

Altcoin Market Cap launched into new All Time Highs from the very same level that launched Altcoin Market Cap into new December 2017 All Time Highs A perfect example of market cyclicality if there ever was one#BTC $ETH #Bitcoin https://t.co/h1kkiZ4SLj pic.twitter.com/5sMEbkS4BD — Rekt Capital (@rektcapital) March 20, 2021

To keep track of DeFi updates in real time, check out our DeFi news feed Here.

Ethereum Could Overtake Bitcoin, Messari Analyst Says

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Bloomberg

(Bloomberg) – The British economy’s worst moments in the coronavirus crisis are hopefully behind it, and hints of that thesis coming true might emerge in reports due this week.The first expansion of U.K. services for five months, a partial rebound of retail sales and the fastest inflation since July are just some of the outcomes anticipated by economists in a slew of data for the most recent periods available in the current quarter. In a reminder of the damage caused, unemployment may also have reached the highest since 2015.A fledgling pickup could lay the foundations for a reversal in Britain’s fortunes following what Bloomberg Economics describes as a nadir for output in January. After one of the world’s most successful vaccination rollouts, with more than half of adults now jabbed, the next quarter will feature gradual reopenings allowing such a revival to take hold.How the economy proceeds from there remains a matter of suspense for citizens and policy makers alike. At its decision last week, the Bank of England contained any sense of optimism by saying the outlook remains unusually uncertain. Its chief economist, Andy Haldane, was bolder: he declared that “we are in for a rapid-fire recovery.”One shadow remaining over Britain’s prospects is its ability to reestablish trading relationships disrupted by its exit from the European Union. An agreement with the U.S. would help there, and that’s just what Trade Representative Katherine Tai, and her U.K. counterpart Liz Truss, will discuss in a call on Monday.What Bloomberg Economics Says:“Looking beyond the first quarter, we continue to forecast U.K. growth will pick up sharply as the economy reaps the benefits of looser restrictions and the vaccine rollout program. Our baseline view is that the economy reaches its pre-virus level in the second quarter of 2022.”–Dan Hanson, senior economist. For full analysis, click hereElsewhere, U.S. Treasury Secretary Janet Yellen and Federal Reserve Chair Jerome Powell testify to Congress and global policy makers including European Central Bank President Christine Lagarde, BOE Governor Andrew Bailey and Bank of Canada chief Tiff Macklem discuss central bank innovation at a four-day conference organized by the Bank for International Settlements. Meanwhile, at least 15 rate decisions – including Mexico, South Africa and Switzerland – are scheduled.Click here for what happened last week and below is our wrap of what is coming up in the global economy.U.S. and CanadaInvestors will be watching as Yellen and Powell testify before the House Financial Services Committee on Tuesday and the Senate Banking Committee on Wednesday for quarterly Cares Act hearings, during which they will likely discuss the state of the U.S. economy and the role of fiscal and monetary aid in the pandemic recovery.On the data front, new and existing home sales as well as personal income and spending figures will probably show weakness, due to the impact of inclement winter weather on economic activity in February. Economists expect the slump to be short-lived. The Bureau of Economic Analysis will also release it’s latest revision of fourth quarter 2020 GDP, which was last reported at an annualized 4.1%.For more, read Bloomberg Economics’ full Week Ahead for the U.S.Europe, Middle East, AfricaMore upbeat flash PMIs and German Ifo confidence numbers may not be enough to distract from Europe’s chaotic vaccine rollout, which is likely to be a topic of a summit of European Union leaders.ECB officials including Chief Economist Philip Lane and Vice President Luis de Guindons speak throughout the week and may reiterate Lagarde’s mantra that euro-area governments must make sure to roll out their joint spending plan on time to ensure the region’s recovery from the coronavirus pandemic.Read more: EU Plodding Stirs ECB Concerns as U.S. Surges on With StimulusSwitzerland’s central bank will publish its 2020 currency intervention tally and conduct the first rate decision of the year, with officials expected to maintain current policy settings with the world’s lowest interest rate.Counterparts in Hungary, Iceland, the Czech Republic and Morocco are also expected keep their monetary stance unchanged.That’s likely to be the case too across Africa, where Ghana’s central bank will probably hold its key interest rate for a sixth straight meeting on Monday as it monitors how new tax measures and higher utility fees affect inflation. In Nigeria, policy makers are likely to also keep the key rate unchanged, even with inflation at a four-year high.South Africa’s central bank, which has signaled interest-rate hikes later this year, will probably refrain from doing that already on Thursday as the economy’s recovery from its biggest contraction in a century remains fragile.Read more: Key African Central Banks Aren’t Rushing to Raise Interest RatesMeanwhile, investors will be keeping a close eye on Turkey, where two days after a bigger-than-expected increase in interest rates, President Recep Tayyip Erdogan removed the country’s third central bank governor in less than two years, and replaced him with an advocate of lower rates.For more, read Bloomberg Economics’ full Week Ahead for EMEAAsiaSouth Korea kicks off the week with early trade data for March that should offer a clearer sign of how global trade is recovering without the distortions of the previous two months.The Tokyo region is set to emerge from its state of emergency this week. Preliminary PMI data for March out Wednesday will give an indication of recent activity in Japan’s manufacturing and service sectors, while early inflation figures from the capital will also show the likely direction of nationwide prices.China is likely to leave its loan prime rate unchanged on Monday, Thailand sets interest rates on Wednesday and the Philippines central bank meets Thursday.For more, read Bloomberg Economics’ full Week Ahead for AsiaLatin AmericaBrazil serves up the minutes of last week’s interest rate meeting, the mid-month reading on consumer prices and the central bank’s quarterly inflation report. The likely takeaway: the suddenly hawkish central bank hopes to front-load a tightening cycle that both brings above-target inflation to heel and spares an unsteady and challenged recovery.Banco de Mexico’s situation on Thursday is more nuanced. In the lead up, the bi-weekly reading of consumer prices will creep closer to the top of the target range while data on unemployment, retail sales and economic activity will underscore the lack of domestic demand. The central bank’s own forecast – that inflation will breach the top of the target range in the second quarter before slowing – may persuade the conservative Banxico to hold at 4% this month.Rounding out the week, Argentina reports full-year and fourth-quarter output on Tuesday while Colombia’s central bank on Friday will all but certainly keep its key rate at a record-low 1.75%.For more, read Bloomberg Economics’ full Week Ahead for Latin America(Adds touts in EMEA section)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.

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