Ethereum Surpasses Bitcoin To Become Largest Network For ‘Trustless’ Money Settlement
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How important are dividends to a stock investor’s profits? Speaking before the Financial Industry Regulatory Authority (FINRA) on October 15, 2007, investing guru John Bogle laid out the case: “Over the past 81 years… reinvested dividend income accounted for approximately 95 percent of the compound long-term return earned by the companies in the S&P 500. These stunning figures would seem to demand that mutual funds highlight the importance of dividend income.” So in other words, dividends are pretty important! Of course, right now the average stock on the S&P 500 is only paying about a 2% dividend yield, which isn’t a lot. If you want to do better than that, though, the REIT sector is a great place to begin your search for high-yield dividend stocks. REITs are companies that acquire, own, operate, and manage real estate portfolios, usually some combination of residential or commercial real properties, or their associated mortgage loans and mortgage-backed securities. Tax law requires that these companies return profits directly to shareholders, and most of them choose dividends as their vehicle of choice for compliance, resulting in frequent high dividend yields across the sector. The slowly ebbing COVID pandemic was hard on real estate managers, as tenants had trouble making rents and owners had trouble leasing vacant space. However, BTIG analyst Tim Hayes believes there are reasons to stay bullish on CRE properties specifically. “While we recognize the headwinds to commercial real estate (CRE) fundamentals and the potential risk to equity/earnings power, we believe there are several reasons to be constructive, especially with the sector trading at a discount to historical levels and offering attractive dividend yields at wide spreads to benchmark rates,” Hayes commented. Against this backdrop, we’ve opened up the TipRanks database to get the latest stats on Hayes’ CRE choices. These are stocks that the analyst initiated Buy ratings on, pointing out their high dividend yield. We are talking about at least 9% here. Ares Commercial Real Estate (ACRE) The first dividend pick we are looking at is Ares Commercial Real Estate, a company focused on the commercial real estate mortgage sector. Ares boasts a diversified portfolio – featuring office space, apartments, hotels, and mixed-use properties – mainly across the Southeast and West. The company has over $2 billion invested in 49 separate loans, 95% of which are senior mortgage loans. At the end of October, the company released 3Q20 earnings (the last reported quarter), showing $22.4 million in total revenue, for a 13% year-over-year gain. The 45-cents earnings per common share was up 40% since the prior year. Furthermore, Ares closed a $667 million commercial real estate collateralized loan obligation, with firmed up funding on 23 senior loans. On the dividend front, Ares declared in December its 4Q20 dividend. The payment, at 33 cents per common share, was paid out on January 15 – and is fully covered by current income levels. At current rates, the dividend annualizes to $1.32 and gives an impressive yield of 10.50%. Among the bulls is Hayes, who wrote: “We believe shares of ACRE are unfairly discounted relative to other commercial mREITs given strong Ares sponsorship, a very healthy balance sheet, and limited exposure to at-risk assets.” In his view, this leaves the company “well positioned to face the headwinds from COVID-19.” In line with these comments, Hayes rates ACRE a Buy, and his $13.50 price target implies a 10% upside from current levels. (To watch Hayes’ track record, click here) Only one other analyst has posted a recent ACRE review, also rating the stock a Buy, which makes the analyst consensus here a Moderate Buy. Shares are priced at $12.28, and their $12.75 average price target suggests room for modest ~4% growth. (See ACRE stock analysis on TipRanks) KKR Real Estate Finance Trust (KREF) Next up we have KKR, which operates in the commercial real estate sector, with almost half of its holdings in the states of New York, Illinois, Pennsylvania, and Massachusetts. The company both owns and finances commercial properties; 83% of its activities are with apartment dwellings and office spaces in desirable urban locations. KKR’s quality can be seen in the company’s quarterly results. The liquidity position was strong – KKR reported $700.6 million available at the end of 3Q20, the last quarter reported. The 56-cent EPS was up 7% sequentially, and 36% year-over-year. Further evidence of KKR’s sound position came at the beginning of January, when the announced it had closed 7 new commercial loans in Q4, totaling $565.4 million. This level of activity is a clear sign that KKR is recovering from the pandemic-related economic turndown. The solid foundation put the company in position to continue its dividend – which has been kept reliable for four years now. The most recent declaration, made in December, was for a 43-cent per common share dividend that was paid out in mid-January. That rate gives an annual payment of $1.72 per common share, and a robust yield of 9.7%. Covering KREF, Hayes is most impressed by the company’s move back toward proactive loan origination, saying, “We view 4Q20 origination activity to be in line with pre-pandemic production, and demonstrates a shift from “defense” to “offense” as transaction activity has picked up and the capital markets remain accommodative. We expect increased capital deployment to support earnings power and dividend coverage, and could potentially warrant an increase in the dividend as the macroeconomic outlook improves.” To this end, Hayes gives KREF a Buy and sets a $19.50 price target that indicates ~6% growth from current levels. (To watch Hayes’ track record, click here) Wall Street has been keeping quiet on all things KREF, and the only other recent review also recommends a Buy. Put together, the stock has a Moderate Buy consensus rating. Meanwhile, the average price target stands at 19.26 and implies a modest ~5% upside. (See KREF stock analysis on TipRanks) Starwood Property Trust (STWD) For the third stock on Hayes’ list of picks, we turn to Starwood, a commercial mortgage REIT with a varied portfolio of first mortgages and mezzanine loans, in the $50 million to $500 million range. The company operates in the US and Europe, boasts a $5.9 billion market cap, and has offices in New York, London, and San Francisco. Starwood’s high-end portfolio has brought it solid earnings, even during the ‘corona recession’ of 2020. The company recorded $152 million in GAAP earnings for 3Q20, coming out to 53 cents per share, for gains of 8% sequentially and 6% year-over-year. With that in the background, we can note the company’s dividend, which has been held steady at 48 cents per share for over two years. The last declaration was made in December, and the dividend was paid out on January 15. At the current rate, it annualizes to $1.92 and the yield is 9.23%. Once again, we’re looking at a stock that Hayes recommends to Buy. “We view STWD to be one of the few “blue chips” in the commercial mREIT sector given its size, liquidity, best-in-class management team, strong balance sheet, and diversified investment platform which has consistently generated stronger ROEs than peers. To that end, STWD is one of few commercial mREITs that neither restructured its liabilities with expensive rescue capital nor cut its dividend since the onset of COVID-19,” Hayes opined. Overall, there is little action on the Street heading STWD’s way right now, with only one other analyst chiming in with a view on the company’s prospects. An additional Buy rating means STWD qualifies as a Moderate Buy. However, the $21 average price target suggests shares will remain range bound for the foreseeable future. (See STWD stock analysis on TipRanks) To find good ideas for dividend stocks trading at attractive valuations, visit TipRanks’ Best Stocks to Buy, a newly launched tool that unites all of TipRanks’ equity insights. Disclaimer: The opinions expressed in this article are solely those of the featured analysts. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
Ethereum’s CME Launch Pushes ETH above $1,820
Ethereum, the world’s second-largest crypto asset, is up more than 20% since the launch of Ethereum Futures Contracts by the CME Group on Monday. A total of 388 ETH contracts were traded on the first day with a total volume of $33.6 million.
Ethereum’s price recorded its highest level on Wednesday after ETH jumped from $1,500 to above $1,800 within the first three days of the week. As of writing, the cryptocurrency is trading above $1,810, eyeing another record high.
ETH’s price is not the only thing that is gaining attention these days. The latest data by crypto analytics and research firm CoinMetrics shows that Ethereum’s on-chain network activity has increased significantly in the last few months and the network is now settling more value than BTC.
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Grayscale, the world’s largest crypto asset manager, purchased 12,450 Ethereum in the last 24 hours as the total number of Grayscale’s ETH under management jumped above 3.05 million. The total value of the company’s ETH assets now stands at around $5.4 billion. Grayscale accumulated 96,199 ETH in the last 7 days.
Institutional Adoption
The recent launch of Ethereum’s CME Futures Contracts gave institutional investors another platform to trade ETH. Since the start of 2021, institutional demand for ETH jumped substantially as major crypto asset management firms reported growing interest of institutional investors in Ethereum-related investment products. Finance Magnates reported yesterday about the jump in ETH crypto inflows. According to the CoinShares report, Ethereum represented around 80% of the total crypto inflows last week.
ETH saw a rapid increase in its transaction fees, but despite the jump in fees, the overall network activity and usage remained high. Ethereum’s total market cap surpassed $200 billion today as the cryptocurrency is now more valuable than leading financial firms like Wells Fargo and Citigroup. The overall market cap of crypto assets jumped above $1.4 trillion for the first time today after the rally in Bitcoin and Ethereum.
What Determines the Price of Ethereum? • Benzinga
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Ethereum is the second most valuable cryptocurrency by market capitalization, second to only Bitcoin. Ethereum’s price is determined by the market supply and demand for the token, similarly to how the price of stocks are determined.
Unlike stocks, Ethereum doesn’t have revenues, profits or a formal balance sheet, so it’s hard to determine the intrinsic value of Eth tokens. Although hard to value, Ethereum still holds intrinsic value. Eth tokens are necessary for transacting on Ethereum’s blockchain, which supports a variety of financial functions.
This past year Ethereum’s price has appreciated much faster than Bitcoin’s, despite Bitcoin being over double its previous all-time high of $19,800. Since March of last year, the price of Ethereum has risen over 1,200%. But what is Ethereum, and what actually determines Ethereum’s price?
What is Ethereum?
Ethereum, a decentralized blockchain network that supports smart contracts, executes agreements and holds escrow like traditional contracts. You don’t need a 3rd party, such as a court, to enforce the contract. Smart contracts get enforced by sets of code on Ethereum’s blockchain.
Smart contracts are Ethereum’s main competitive advantage over Bitcoin. While Bitcoin is a great store of value, it doesn’t allow for complex financial transactions to be done on its blockchain. With smart contracts, you can loan or borrow money, insure property and trade derivatives. All of these functions have already been made available on Ethereum, and many more protocols are being developed to extend the use case for smart contracts.
Technically, Ethereum is the blockchain network that powers Eth tokens, Ethereum’s native token. Eth and Ethereum are commonly used interchangeably. Ethereum’s blockchain also allows for new tokens to be created which serve specific purposes. Here are some of the most common types of Ethereum tokens:
ERC-20 tokens are the most common type of Ethereum token. These types of tokens are fungible tokens –– each coin is identical and holds the same value. To learn about ERC-20 tokens in more detail, check out the Ethereum Foundation’s website. Coins like Uniswap (UNI), Binance Coin (BNB) and Tether (USDT) are ERC-20 tokens.
are the most common type of Ethereum token. These types of tokens are fungible tokens –– each coin is identical and holds the same value. To learn about ERC-20 tokens in more detail, check out the Ethereum Foundation’s website. Coins like Uniswap (UNI), Binance Coin (BNB) and Tether (USDT) are ERC-20 tokens. ERC-721 tokens are non fungible tokens (NFTs). These tokens all hold their own distinct value and have unique properties tied to each token. NFTs are most commonly used for in-game collectibles, such as video game skins or exclusive in-game items.
are non fungible tokens (NFTs). These tokens all hold their own distinct value and have unique properties tied to each token. NFTs are most commonly used for in-game collectibles, such as video game skins or exclusive in-game items. ERC-223 tokens are fungible tokens that are very similar to ERC-20 tokens. While ERC-20 tokens can be lost in a failed transaction, ERC-223 behaves exactly like Ethereum transactions, so they cannot be lost.
Different types of tokens on Ethereum’s blockchain allow for a variety of use cases. Ethereum smart contracts have the potential to tokenize land deeds, auto loans, financial derivatives and even voting rights.
Brief History of Ethereum
Vitalik Buterin first conceptualized a smart contract-enabled blockchain in 2013. At the time, Buterin was only 18 years old, but he quickly gained the support of blockchain enthusiasts. Ethereum hosted its ICO (Initial Coin Offering) in 2014 and by 2015 it was trading on exchanges for around $2.
Ethereum’s price first began to skyrocket in spring 2017. At the time, each Eth token was trading for around $10, but by the summer of 2017 Eth reached triple digits. ERC-20 tokens were being created by developers daily, although few of these projects had long-term sustainability. Ethereum’s price topped out in January 2018, surpassing $1,400.
It wasn’t until recently that Ethereum reached new all-time highs. In February 2021, Ethereum’s price hit $1,770 before retracing back to around $1,600.
The cryptocurrency bear market (2018-2020) washed out many ERC-20 tokens that were developed during the bull market. Many of these projects were rushed to the market and under-delivered on their promises.
During the bear market, however, more promising projects on Ethereum were developed. These new dApps (decentralized applications) mainly focus on Decentralized Finance (DeFi). This aims to replace traditional banking services with smart contracts on the blockchain. Decentralized lending, insurance and automated trading are all examples of promising new developments on Ethereum’s blockchain.
It comes as no surprise that DeFi tokens are trending up in tandem with Ethereum because it is the network that hosts these DeFi tokens.
How is Ethereum Value Determined?
Ethereum’s price is determined by market supply and demand for the cryptocurrency. Just like stocks, cryptocurrency markets have order books with buy and sell orders. An increase in demand for Etherum will drive the price up and an increase in sell order supply will drive the price down.
Unlike Bitcoin, Eth tokens have more intrinsic utility. This is because Eth tokens are needed to transact on any decentralized application built on the Ethereum blockchain. As more transactions on Ethereum occur, the price of transaction fees increases, as transaction fees are based on supply and demand.
How High Can the Price of Ethereum go?
Historically speaking, Ethereum’s price has been more volatile than Bitcoin’s. If you invest in Ethereum instead of Bitcoin, you’d be increasing your risk for more upside potential.
Some investors claim that Ethereum’s market cap will surpass Bitcoin’s valuation due to the wide range of use cases on Ethereum. Some analysts predict that Ethereum can reach $10,500 in the coming years.
In the 2017 bull run, Ethereum reached a price of about 0.1 Bitcoin per Eth token. Assuming we can reach this proportion again, Ethereum would be trading at $3,850, given the current price of Bitcoin.
However, it’s unlikely that Bitcoin has reached its top for this bull market. In years past, Bitcoin has increased about 20 times in value each bull run. Bitcoin would have to increase 5 times this bull run to reach $100,000. If this happens and Ethereum reaches its previous Bitcoin proportion, Ethereum would be trading for $10,000 per token.
Ethereum $1792.21 Buy Ethereum
What Affects the Price of Ethereum?
Many factors affect the market supply and demand for Ethereum. As stated previously, the market supply and demand for Eth tokens is what solely determines the price of Ethereum. The most important factors that affect the supply and demand for Ethereum are outlined below.
Eth 2.0 staking is an upgrade to Ethereum’s network that allows you to stake Ethereum for interest. The Eth 2.0 network is still in beta, but there has already been over $1 billion of Eth locked in staking, decreasing the market supply of the token.
is an upgrade to Ethereum’s network that allows you to stake Ethereum for interest. The Eth 2.0 network is still in beta, but there has already been over $1 billion of Eth locked in staking, decreasing the market supply of the token. Media coverage plays a large role in stimulating demand for cryptocurrencies. While most mainstream media covers Bitcoin, few have yet to broadcast Ethereum to the masses.
plays a large role in stimulating demand for cryptocurrencies. While most mainstream media covers Bitcoin, few have yet to broadcast Ethereum to the masses. Price of Bitcoin affects the cryptocurrency market as a whole. When Bitcoin is bullish, it’s likely other tokens like Ethereum will be, too.
affects the cryptocurrency market as a whole. When Bitcoin is bullish, it’s likely other tokens like Ethereum will be, too. High transaction volume increases the amount of transaction fees on Ethereum’s blockchain. These fees are paid to Ethereum miners, who often sell their tokens on the market, increasing the supply of Eth. Conversely, more Eth tokens are demanded when transaction fees are higher, as you need to own Ethereum to pay transaction fees.
increases the amount of transaction fees on Ethereum’s blockchain. These fees are paid to Ethereum miners, who often sell their tokens on the market, increasing the supply of Eth. Conversely, more Eth tokens are demanded when transaction fees are higher, as you need to own Ethereum to pay transaction fees. ERC-20 tokens increase Ethereum’s utility. Developers can code smart contracts on Ethereum to create decentralized applications that typically host their own ERC tokens. Regardless, Ethereum tokens are still needed to transact on Ethereum’s blockchain, further increasing the demand for Eth.
Is Ethereum a Good Investment in 2021?
At the beginning of January this year, Ethereum was trading for around $730, less than half its current market price. Ethereum is an attractive investment for any risk-tolerant investor looking to diversify their portfolio.
Decentralized finance has recently gained attention from investors after the trading halts from the recent Gamestop (GME) pump. Because no singular entity can control decentralized platforms, they cannot be corrupted by institutions. Decentralized exchanges like Uniswap (UNI) and 0x (ZRX) have more than doubled in value over the last couple of weeks, as investors are realizing DeFi’s potential.
Bitcoin or Ethereum?
The biggest advantage Ethereum has over Bitcoin is its ability to host smart contracts on its blockchain. Bitcoin is great to use as a store of value, but its use-case in DeFi is limited. Also, Bitcoin has less growth potential than Ethereum.
While Bitcoin has already doubled from its previous all-time high in December 2017, Ethereum recently just broke new all-time highs this past week. Some investors predict Ethereum will move similarly to Bitcoin, expecting Ethereum’s price to double from its previous high of $1,400 in the short term.
Risks of Investing in Ethereum
Like any investment, you’re risking your capital for potential reward. Cryptocurrencies are much more risky assets than traditional investments, but they offer a much higher potential reward.
As a general rule, a cryptocurrency’s market cap and level of risk are inversely related. Ethereum is the 2nd largest cryptocurrency by market cap and it’s historically less risky than smaller market cap cryptocurrencies.
Best Exchanges for Ethereum
To purchase Eth tokens you need to set up a cryptocurrency brokerage account. Coinbase is a great option for beginners since it’s easy to use and offers a mobile app. Gemini is another cryptocurrency exchange that offers a wide variety of crypto tokens, including Ethereum.
Alternatively, you can use a decentralized exchange if you already own cryptocurrencies. Decentralized exchanges offer a platform for you to exchange your cryptocurrencies for Ethereum or any other ERC-20 token.
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Ethereum Price Prediction
It’s hard to predict where the price of Ethereum is headed, but if history is any indicator Ethereum has much more room to grow. With new decentralized finance programs being built on Ethereum’s network, more Eth tokens are demanded to pay transaction fees. This is why some investors see Ethereum as the economic bandwidth of the internet.