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?

Ethereum, dogecoin surge as cryptos continue volatile recovery

Ethereum — the world’s second most popular crypto — soared more than 10% on Tuesday morning. Photo: Reuters

Cryptocurrencies were broadly higher on Tuesday morning as they continue a volatile recovery after a major sell-off the weekend before last.

Bitcoin (BTC-USD) was up 3.6%, trading at $36,878 (£25,915). It once again fell below $40,000, although last week it did manage to crawl past the mark. It remains far from its all-time high of $63,000.

Ethereum (ETH-USD) — the world’s second most popular crypto — soared more than 10%, to trade at $2,655, while dogecoin (DOGE-USD) gained 8.6% to $0.33.

“It seems like everything is very much hanging in a holding pattern,” said Naeem Aslam, chief market analyst at Ava Trade.

But he said “the upward momentum still looks like it lacks any major backing, and a threat for a further downward shift in the bitcoin price is still certainly on the table.”

“Basically, as long as the bitcoin price doesn’t cross above the 40K and break another resistance which is at 50K, it is unlikely we may see a beginning of another major bull rally” he added.

Kaia Parv, head of Investment Research at trading platform Fxprimus, told Yahoo Finance UK that “bitcoin and correlated crypto assets may have found their bottom as there seems to be bullish price action this morning. Having said that, technical indicators are still deeply bearish for the upcoming trading sessions.”

Over the weekend crypto portfolio management app Blockfolio asked Tesla CEO Elon Musk to create a hot tub heated by dogecoin, to which the crypto supporter replied: “great idea.”

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Musk has been a dogecoin supporter for a while now, tweeting about it regularly. Almost every time this sends the price of the joke token higher and this time was no different.

Meanwhile, bitcoin has been dampened by many things recently, including a crackdown in China and Iran. Last week, Bank of Japan governor criticised digital currencies for speculation.

Watch: What are the risks of investing in cryptocurrency?

“Most of the trading is speculative and volatility is extraordinarily high,” Haruhiko Kuroda had said.

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And the country’s regulator has also issued a warning to crypto derivatives exchange Bybit for allowing residents of Japan access to the exchange without registering with the country’s regulator.

“Cryptocurrencies were the biggest losers in May… seeing a massive slump as authorities struck a distinctly negative tone towards them in multiple countries,” noted a Deutsche Bank (DBK.DE) note.

Read more: European markets open higher amid third wave fears

But cryptos are continuing to get mainstream acceptance.

Financial advisory organisation deVere Group said it will offer its clients a fixed-yield bond that tracks futures of bitcoin and ethereum on the Chicago Mercantile Exchange over a one-year maturity period.

The decision “was made to cater to the soaring client demand regarding cryptocurrencies,” the company said.

WisdomTree, an exchange traded fund and exchange traded product (ETP) sponsor, announced its physically-backed bitcoin and ether ETPs have listed on Euronext (ENX.PA) exchanges in Paris and Amsterdam.

“Listing on Euronext opens up more access points for investors to conveniently allocate to, and trade, both WisdomTree Bitcoin (BTCW) and WisdomTree Ethereum… This milestone represents the growing acceptance of cryptocurrencies, the evolving European regulatory landscape and the latest signal that digital assets are here to stay,” said Jason Guthrie, head of digital assets, Europe, WisdomTree.

“A willingness from regulators and exchanges to list cryptocurrency ETPs is lending further credibility to this growing and popular asset class. This development will buoy institutional investors, trading via Euronext, that have been waiting for further signs of acceptance before making their first allocations to digital assets.”

Watch: What is bitcoin?

Ethereum’s adjusted on-chain volume, miner revenues reached new highs in May

Data for the month of May shows that on-chain transaction volume and mining revenue figures for Ethereum hit all-time highs.

The monthly mining revenue figure hit $2.35 billion, an increase in total revenue by 42.4% compared to April. Ethereum miner transaction fees also broke past $1 billion for the first time in May, increasing 43.9% from April to reach $1.03 billion.

The revenue figure was buoyed by ETH hitting an all-time high price last month above $4,300. At press time, the price of ETH is about $2,570, per Coinbase.

The adjusted on-chain volume figure surged to a high of $666 billion, representing a 92.7% increase from April.

As noted by The Block’s Lars Hoffmann in his by-the-numbers research report, May represented the first time that the on-chain volume figure for Ethereum surpassed that of bitcoin. Bitcoin’s on-chain volume declined by 8.9% in May, falling from $446.9 billion in April to $407.3 billion.