NFTs, DeFi Boost for Ethereum Dims Clamor of Bitcoin Maximalists

NFTs, DeFi Boost for Ethereum Dims Clamor of Bitcoin Maximalists

(Bloomberg) – Surging demand for NFTs and DeFi apps is allowing backers of Ethereum to dampen the cacophony of Bitcoin maximalists who have long claimed that only the original cryptocurrency matters.

Ether, the native token of the most-used blockchain, jumped 36% in August, more than double the 13% return for holders of the biggest digital asset by market value during the same period. So far this year, Ether is outperforming Bitcoin by the widest margin going back to at least 2018, Bloomberg data show.

The Ethereum “community has taken up that mantle to a much louder degree and that sort of blockchain development is really having a bullish moment in crypto right now,” said Stephane Ouellette, chief executive and co-founder of FRNT Financial.

Many analysts had projected that Ether would rally following a major software upgrade to the Ethereum blockchain in August. The enhancement, code-named London, trims the pace at which the supply of Ether tokens grows.

Ahead of the upgrade, many investors argued the reduction of the coin’s supply could result in higher prices due to increased scarcity. Others also said the supply could drop further once Ethereum moves to a different mechanism of verifying transactions, something that could happen in the first quarter of next year. This new verification system will use computers supporting the Ethereum network to stake Ether coins instead of miners in most cases.

“The innovation at play in the smart-contract arena had been defeating maximalist mantras for quite some time,” said Mati Greenspan, founder and CEO of Quantum Economics. Still, because a lot of the advancements – particularly in DeFi and NFTs –are so new, it’s difficult to say exactly how much more growth there will be or what other new sectors might arise, he said.

The case for Ether surpassing Bitcoin has been been a constant theme in crypto since the alternative blockchain was created. Bitcoin maximalists maintain that it remains the purest form of digital money and point out that the original cryptocurrency has a market value of about $900 billion, or more than double that of Ether.

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August marked Ether’s second consecutive monthly advance and its best monthly performance since April. The coin is up more than 350% this year, compared with Bitcoin’s 60% gain. On Wednesday, it rose about 5% to $3,558 while Bitcoin gained around 1% to $47,400.

“Ethereum is seen as a better store of value – that’s why it has been preferred by institutions for a while now,” said Matt Maley, chief market strategist for Miller Tabak + Co. “It is now becoming preferred among all investors.”

And it’s not just Ether that’s been in the limelight recently, said Ouellette. Solana and Cardano represent projects with a similar focus and both have rallied.

Among analysts and investors, there’s little consensus as to what’s driving parts of the frenzy for smaller or alternative coins. Some posit that speculators are moving from the mainstays to newer, more exciting offshoots, as they often do after big runs. Others see a world awash in cash and ultra-low rates, which ultimately pushes investors toward ever-wonkier assets.

Wilfred Daye, chief executive officer of Enigma Securities, said Ethereum is the fabric of the tokenized economy and it has a deeply rooted and solidified programmer community. From a trading perspective, “ETH has higher volatility than Bitcoin and similar liquidity profile as Bitcoin,” he said. But, “in the long run, ETH has a real chance of outperforming.”

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Ethereum price surges: How to buy cryptocurrency following market spike

Ether, the cryptocurrency a part of the Ethereum blockchain network, had a significant surge on Wednesday with a price of $3,563, according to Bitcoin.com.

Ethereum is currently right behind Bitcoin, with a market capitalization of $434 billion, according to real time data tracked by CoinMarketCap (Note: market capitalization is constantly changing). It experienced a 15% surge within the past seven days.

Bitcoin and Cardano have also recently made moves in the cryptocurrency world. Bitcoin hit over $50,000 for the first time since May last month, while Cardano (ADA) spiked to almost $3, an all-time high for the cryptocurrency.

How to buy Ethereum

Ethereum is available to purchase on Crypto.com, Coinbase, Bitcoin IRA, Kraken and eToro, to name a few.

What is cryptocurrency?

Cryptocurrency is a digital asset designed to be used over the internet, according to Coinbase. It’s decentralized, meaning it isn’t controlled by the government or any other central authority such as a bank.

If you’re interested in investing in other cryptocurrencies such as Bitcoin, Cardano, Dogecoin and Shiba Inu, here are some options to get you started:

If you want to educate yourself more on cryptocurrency and how it works, you can always enroll in an online course, too. Courses are offered at online platforms Coursera, LinkedIn Learning and Udemy.

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Nicolette Accardi can be reached at naccardi@njadvancemedia.com. Follow her on Twitter: @N_Accardi. Find NJ.com on Facebook. Have a tip? Tell us. nj.com/tips

Ethereum price breaks $3,500 and hits 3-month highs against Bitcoin

Ethereum’s native asset, Ether (ETH), has extended its rally on Wednesday to log multi-month highs against Bitcoin (BTC) and the United States dollar.

The ETH/BTC exchange rate rose 3.13% to hit 0.07475 for the first time since June 9. Meanwhile, bids for ETH/USD climbed 3.4% to $3,546, the highest since May 18, showcasing a renewed upside sentiment in the second-largest cryptocurrency market after it consolidated sideways for more than three weeks.

ETH/USD and ETH/BTC daily price chart. Source: TradingView

Ether’s price jump appeared despite a wobbling price behavior across the cryptocurrency market. For instance, Bitcoin prices remained stuck around $47,000 while eyeing a clear breakout move above their psychological resistance level of $50,000.

Similarly, one of Ether’s top rivals, Cardano (ADA), also consolidated sideways following its 100%-plus price rally in August, while its market dominance fell from 4.54% between Aug. 8 to 4.26% at the time of writing.

Cardano prices vs. its market dominance against all the cryptocurrencies. Source: TradingView

The same period witnessed Ether’s market dominance rising from 18.17% to 19.65%, hinting that Ether attracted capital out of assets with interim overstretched valuations.

Hodling detected

Ether’s run up above $3,500 coincides with a decline in ETH reserves across all exchanges.

Blockchain analytics firm CryptoQuant reported that the amount of Ether held in exchange wallets has declined from 19.45 million on Aug. 18 to 18.75 million on Wednesday.

However, analysts perceive falling reserves as bullish, arguing that traders primarily withdraw their coins from exchanges because they choose to hold them instead of selling them for other assets.

Ether balance across exchanges drop as ETH/USD rise. Source: CryptoQuant

Additionally, more upside cues for Ether prices have emerged due to supply squeeze prospects.

CryptoQuant data shows that more than 6% of Ether’s supply now stands locked inside the Ethereum 2.0 smart contract — i.e., about 7.28 million ETH, worth $25.77 billion at current exchange rates.

Total value staked in Ethereum 2.0 smart contract exceeds $25 billion. Source: CryptoQuant

Additionally, a new Ethereum network update, dubbed “London Hard Fork” has introduced a protocol that burns a fraction of its gas fees. Since its introduction on Aug. 5, the Ethereum Improvement Proposal 1559 has removed 156,986 ETH — worth over $555 million — from the supply, per data provided by WatchTheBurn.com.

Demand prospects against supply squeeze

Ether has already climbed over 380% in 2021, with its gains boosted by the emerging decentralized finance (DeFi) and nonfungible token sector. In comparison, Bitcoin has gained 62% year-to-date against the dollar.

Payal Shah, director of equity and cryptocurrency product development at CME Group, noted that Ether is equivalent to DeFi, a sector that enables users to trade, as well as borrow and lend directly assets to one another without involving central authorities like banks.

“Ethereum hosts more than 200,000 ERC tokens, some of which are part of the top 100 largest cryptocurrencies,” Shah wrote in a note published mid-August.

“Together, with the accessibility of DeFi and the draw of better interest rates, more and more retail consumers will likely turn to the DeFi space.”

Data tracker DappRadar reports that the total value locked inside Ethereum-backed DeFi protocols has crossed $100 billion.

Cardano rivalry

But Ethereum is racing against a long list of rivals as it grapples with network congestion and higher fees issues. For instance, Cardano employs a dual-layer design to perform computations and settlements separately, thus solving network congestion issues.

Additionally, Cardano consumes almost no energy due to its proof-of-stake (PoS) system. Ethereum expects to have switched fully to PoS by 2022–2023, which gives Cardano and other Ethereum rivals a lot of room to grow.

But Ethereum has a first-mover advantage in the blockchain space, compared to Cardano, which has very few decentralized applications to show.

Related: Institutions remain bullish on Cardano and Ether, while BTC outflows persist

“Ethereum is the place to be, already boasting thousands of DApps,” said investment analysts at the Value Trend, adding:

“It simply makes more commercial sense, at the moment, to build an app on Ethereum.”

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.