No.1 Cryptocurrency: Can Ethereum beat Bitcoin in future?

No.1 Cryptocurrency: Can Ethereum beat Bitcoin in future?

The recent decline in Bitcoin price has put the spotlight back on the second biggest cryptocurrency, Ethereum, which, some say, has the potential to replace it as the number one digital currency in market share. Bitcoin has seen a major fluctuation in price in the past couple of months. It rose to the all-time high of $65,000, only to fall 50 per cent to $30,000. Its market share also went down to 42 per cent ($1.6 trillion) from 70 per cent before the start of 2020, CoinGecko data shows.

The month of May saw the biggest fall in Bitcoin price, thanks to the tightening of cryptocurrency laws by China and Tesla chief executive Elon Musk changing his stance on Bitcoin.

When compared to the market share, Bitcoin is still way ahead compared to Ethereum. The May rout helped Ethereum narrow this gap by about $350 billion. While Ether dropped by around 11 per cent in May, Bitcoin suffered a much worse route at 37 per cent. On year-on-year growth too, Ethereum seems to be beating Bitcoin. While Ethereum grew over 900 per cent over the past year, Bitcoin saw a 275 per cent jump.

Ethereum investors and its fans say there are two big reasons for a strong momentum – popularity for blockchain-based financial services and digital collectables and a major upgrade in its technology, which is underway and will bring a tectonic shift in the way Ethereum works.

Also read: Big change coming in Ethereum! To give huge advantage against Bitcoin

As countries become more open towards cryptos, interest in digital currencies have expanded beyond Bitcoin. Experts say Bitcoin will eventually lose its title as the number one crypto as another digital currency with better technology and tech agility will become more popular among crypto investors, and Ethereum seems to be offering just that.

“(Ethereum) will likely exceed Bitcoin at some point in the future, as Ethereum will be superior when it comes to innovation and developer interest,” said Tegan Kline, co-founder of blockchain software company Edge & Node, reported Bloomberg. Some also believe that replacing Bitcoin won’t be an easy game for Ethereum as it still has many advantages over Ethereum. “Bitcoin will still remain king of the cryptos,” Edward Moya, senior market analyst at Oanda Corp told the news platform.

Also read: Bitcoin price recovers to $38,403 after Elon Musk’s meeting with miners

Ethereum is also working on a major shift that will help save up to 99.5 per cent of the energy it currently consumes. Given the stiff opposition cryptos like Bitcoin are facing over climate change issues, it’s possible that more investors get drawn towards Ethereum in future.

Ethereum already uses lower energy than the most popular cryptocurrency Bitcoin. It will soon be completing the transition to Proof-of-Stake (PoS) from the Proof-of-Work (PoW) system, according to Carl Beekhuizen, an Ethereum Foundation researcher. The technological shift will mean Ethereum will consume even less energy than Bitcoin.

Meanwhile, in the past 24 hours, Bitcoin has seen 0.18 per cent growth in its price to $36,291.92, while Ether grew 3.79 per cent to $2,589.5.

Also read: Cryptocurrency market crashes! Is it time to sell Bitcoin?

You Can Buy Ethereum at a Discount. Here’s How.

Cryptocurrencies have taken the financial markets by storm. Dozens of different tokens have posted monumental gains so far in 2021, notwithstanding the huge crash that many cryptocurrencies suffered just a couple weeks ago. Crypto is a volatile market, but many see the future applications for Ethereum (CRYPTO:ETH) and other major cryptocurrencies as having huge potential for investors despite the big increases in price that they’ve already experienced.

The reason why many investors have shied away from cryptocurrencies is that trading directly in tokens requires extra steps beyond stock investing. Most stock brokerages don’t offer direct investing in cryptocurrencies, and most cryptocurrency exchanges don’t have integrated stock trading. That necessitates multiple accounts for would-be crypto investors.

An alternative, however, works within most ordinary stock brokerage accounts – including retirement accounts. Grayscale Ethereum Trust (OTC:ETHE) offers indirect exposure to Ethereum – and even better, it currently offers a discount to the intrinsic value of the Ether it owns.

The basics of Grayscale Ethereum Trust

Grayscale Investments was a pioneering player in the cryptocurrency space, and it quickly jumped into the game with multiple investment trusts geared toward individual and groups of crypto tokens. In the absence of U.S. cryptocurrency exchange-traded funds, Grayscale’s products look very similar, using a combination of private placements and over-the-counter trading of exempt shares to offer Ether exposure to investors.

How Grayscale Ethereum Trust works is pretty simple. Those who qualify as accredited investors – typically institutions as well as individuals with annual incomes exceeding $200,000 both in the current year and in the two past years – were able to invest directly in shares at their net asset value. Those shares were restricted from trading for a period, initially one year, during which shareholders had no way to sell off their holdings. After the time period had elapsed, investors could sell their shares over the counter to investors who hadn’t qualified under the accredited investor standard to invest directly.

For a long time, demand for those released shares was far larger than supply, and so Grayscale Ethereum Trust sold at a premium to the value of the Ether it owned. In fact, premiums of almost 1,000% a year ago and nearly 300% as recently as December offered early accredited investors huge windfalls above and beyond the rise in Ether prices.

96 cents on the dollar

Now, however, the tables have turned. A large set of accredited investors have had their shares released, and they’ve flooded the market trying to sell. That’s pushed the price of Grayscale Ethereum Trust down to the point where it trades at a 4% discount to the value of the Ether it holds. In other words, buyers can pay about $0.96 for shares representing $1 of Ethereum.

Before you think that’s free money, however, it’s important to realize that there’s no guarantee the discount won’t get larger than 4%. During mid-May, discounts widened to as much as 10% to 15%. Some other Grayscale vehicles have had even wider discounts. Because there’s no obligation or ability for Grayscale to cash out shares in exchange for actual cryptocurrency, the share price doesn’t have to match up with the movements in the underlying tokens.

Know what you’re buying

Grayscale Ethereum Trust is also quite expensive compared to ETFs and mutual funds. It charges annual expenses of 2.5%. Currently, each share of the trust works out to about 0.0102 Ether, but within the next year, the 2.5% fee will erode that to the point at which it’ll take slightly more than 100 shares to add up to 1 Ether.

The benefit, though, is that Grayscale Ethereum Trust gets treated like a stock for most brokerage purposes. A broker that doesn’t allow trading in over-the-counter securities won’t allow trading in Grayscale’s products, but otherwise, the trust is available in regular brokerage accounts.

If you’re looking to get exposure to Ethereum, now’s an interesting time to look at Grayscale Ethereum Trust. Many see Ethereum as integral to the future of cryptocurrency, and so it’s entirely possible its price could keep moving higher if crypto can move beyond its recent crash and start climbing higher again.

Top cryptocurrency prices today: Bitcoin, Dogecoin, Ethereum

The global crypto market cap is $1.62 trillion, a 2.17 percent decrease over the last day, while the total crypto market volume over the last 24 hours is $108.80 billion, which makes a 9.77 percent decrease. (Image: Reuters)

Amid volatility, most cryptocurrency prices are mixed today after turning green yesterday (June 1) for the first day in a while.

Popular cryptocurrency Bitcoin’s price is currently $36,332.66, its dominance is currently 41.97 percent, a decrease of 0.25 percent over the day.

The global crypto market cap is $1.62 trillion, a 2.17 percent decrease over the last day, while the total crypto market volume over the last 24 hours is $108.80 billion, which makes a 9.77 percent decrease. Further, the volume of all stable coins is now $92.46 billion, which is 84.98 percent of the total crypto market 24-hour volume.

Meanwhile in India, the Internet and Mobile Association of India -Blockchain and Crypto Assets Council (IAMAI-BACC) on June 1 said it has set up a self-regulatory code of conduct that will see all crypto exchange members voluntarily complying with KYC, tax and other norms.

“A formal board comprising eminent jurists, technical specialists and fintech compliance specialists is also being set up to oversee the implementation of this self-regulatory code,” a statement said.

The IAMAI-BACC welcomed the RBI’s advice to banks against using its 2018 circular that called for non-acceptance of crypto-related transactions of customers.

Name Price 24h% 7d% Market Cap Volume (24h) Circulating Supply Bitcoin $36,321.45 2.22% 6.30% $678,918, 482,584 Ethereum $2,581.94 2.80% 6.90% $299,371 901,387 Tether $0.9998 0.05% 0.13% $61,770 829,541 Cardano $1.75 1.60% 8.36% $55,775 637,696 Binance Coin $355.50 0.95% 0.39% $54,511 573,296 Dogecoin $0.3634 8.49% 4.04% $47,089 769,221 XRP $0.9973 5.64% 0.79% $45,903 064,745 USD Coin $1.00 0.00% 0.01% $22,670 405,798 Polkadot $23.70 5.39% 4.47% $22,242 155,429 Uniswap $26.63 4.69% 2.04% $15,065 651,703

As of 7.50 am on June 2, these are the prices of the 10 largest cryptocurrencies (data from coinmarketcap.com ):You can also check the prices at Coinbase and cryptocurrency news platform CoinDesk.