Why Ethereum is unlikely to drop below $1,500 anytime soon

Why Ethereum is unlikely to drop below $1,500 anytime soon

Investors remain relatively bullish on Ethereum, as lately, they have been eager to acquire Ether at above the $1,500 mark.

Ethereum has had sustained outflows over the last 3 weeks and now we have more than 3.5 million Ethereum staked in 2.0. The exchange reserve on Ethereum is declining constantly. This reflects accumulation and confidence in the market.

Ethereum reserve in all exchanges hit the two-year low.

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However, at the time of drafting this report, a significant amount of profit taking was observed, as the utility crypto traded at $1,776.17 with a daily trading volume of $25.4 billion and is down 3.38% for the day.

It’s also critical to note that miners remain more attracted to Ethereum as they earn almost four times more than those in the Bitcoin network. Ethereum’s fees which amount to the total dollar value spent on the Ethereum blockchain — are at record levels, with over $8 billion in annualized fees.

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While Bitcoin, the world’s most popular Crypto asset, annualized fees are currently around $2.3 billion. This contrast highlights Ether’s growing utility and the reason why it is often referred to as digital fuel.

The odds have been on the utility crypto’s side since its recent upgrade, Ethereum 2.0 (a network that promises better functionality and experience to the Ethereum network).

Unique features of the notable upgrades include a shift from Proof of Stake (PoS) to Proof of work, a new blockchain referred to as the beacon chain that provides better scalability. All of this and more is expected to be phased in through a carefully planned roadmap.

Through the implementation of efficiency, enhancements, scalability, and speed, the Ethereum network becomes better without compromising its decentralization and security.

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

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

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© 2021 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.

Ethereum Could Overtake Bitcoin, Messari Analyst Says

Bloomberg

(Bloomberg) – A standoff between commodities giants and shipping companies is prolonging the labor crisis at sea, with an estimated 200,000 seafarers still stuck on their vessels beyond the expiration of their contracts and past the requirements of globally accepted safety standards. In an effort to keep deliveries of food, fuel and other raw materials on schedule, some of the big commodities firms are avoiding hiring certain vessels or imposing conditions that may block relief for exhausted seafarers. The companies are trying to steer clear of crew changes, which have become far more expensive and time-consuming during the coronavirus outbreak. In an effort to keep shipments on schedule, some firms have asked their shipping partners to guarantee that no change will take place, according to emails and contracts reviewed by Bloomberg.Those requirements risk worsening a labor crisis already in its 12th month, according to ship owners, labor unions and the United Nations. More than a year into the pandemic, hundreds of thousands of mariners are long overdue for shore leave. Some have been working without pay or a firm plan for repatriation, and many have taken desperate measures: in one instance, a captain diverted his ship to the middle of the ocean and refused to return to course without a guarantee of relief.Prior to the pandemic, a ship owner could bring in new crew during routine port stops. That common practice has become a logistical nightmare with Covid border curbs. Some ports require lengthy quarantines for incoming and outgoing workers, others turn away vessels that have changed crews within 10 to 14 days over fears seafarers could spread the virus.In January, around 300 companies, including Vitol Group, the world’s biggest independent oil trader, and Australian mining behemoth Rio Tinto Group, signed a pledge to take action to resolve the crisis for seafarers. Called “the Neptune Declaration,” signatories recognized a “shared responsibility” and promised increased collaboration between ship operators and charterers to facilitate crew changes.As of now, though, some ship owners and labor advocates say little has changed, and not all of the biggest charterers signed on. “We chose not to sign because we believe that our current practices in respect of crew changes are fair and fully respect the need for regular crew changes,” said a spokesperson for Equinor ASA, a major oil, gas and energy company based in Stavanger, Norway. “We do not charter vessels for any voyage if a crew change will be required that cannot be accommodated in our delivery schedule.” Exxon Mobil Corp., the largest U.S. oil and gas producer, has also declined to sign. A spokesperson said the company is “considering next steps.” The pact is “a work in progress,” said Rajesh Unni, a captain and chief executive officer of Synergy Marine, which manages more than 375 ships including container vessels and commodity carriers. Shipping has always had competing interests, he said, but companies that sign the Neptune Declaration “at least commit that they will then follow the standard protocol, which should then give you a lot more comfort that now we’re all on the same page.”What you need to know: Tracking the Labor Crisis at SeaThe fight over who should pay for the higher costs of crew changes is most acute for commodities companies and their shipping partners, which carry out what are called spot charters. Crewed vessels available on demand for anywhere from a few days to several months, spot charters make up 85% to 90% of dry bulk and tanker shipments in the commodities industry, according to industry group BIMCO.Some companies have stipulated no crew changes or asked for verbal guarantees before hiring a charter, according to emails and contracts reviewed by Bloomberg. Charterers have also used questionnaires to learn whether ships are planning crew swaps, according to ship owners. In one instance, a ship owner told Bloomberg, in order to secure a charter with Rio Tinto, he had to extend workers’ contracts, paid additional salary and promised to relieve them when the voyage was complete. He also had to confirm that no crew change was planned for the duration. “Rio Tinto does not use ‘no crew change’ clauses in chartering contracts,” the company said in a statement. “Rio Tinto aims to support the shipping industry and the human rights of the seafarers on which it depends. This requires collaboration between ship owners, who employ the seafarers, charterers and regional port authorities around transparency of information and flexibility on schedule.”The problem, labor advocates and seafarers say, is that the workers don’t have a choice either way. Ship captains often hold the passports of their crew – a convenience for port stops, they say – and ports are tightly controlled borders. Even if a worker wanted to walk away from his vessel, he wouldn’t get very far without a passport, a visa or a plane ticket home.The International Transport Workers' Federation, or ITF, which represents seafarers, is calling on the industry to do more to alleviate the crisis.There are still charterers rejecting charters unless they are given assurances that crew changes don't take place,'' said Stephen Cotton, ITF general secretary. It might not be as blatant as putting it in writing, but it’s still going on. As long as seafarers' lives remain secondary to companies' profits, this crisis will continue to unfold." Read more: What Happens When Tycoons Abandon Their Own Giant Cargo ShipsThe industry says it is the responsibility of ship owners to arrange crew changes and to ensure the safety and well-being of the seafarers on their vessels. BIMCO has encouraged charterers to share the costs of crew changes and developed contract language that requires companies that hire vessels for a fixed period of time – called a time charter – to do just that. Owners of ships available for spot charter, the group said, should change crews when the ship isn’t out for hire.Labor and industry groups want companies to be more flexible and allow tankers and dry bulk vessels to divert or delay deliveries to help alleviate the crisis in stranded mariners. Shareholders, too: A group of 85 investors that manage more than $2 trillion of assets, including Fidelity International, said in January that frequent charterers should be flexible about enabling crew changes and should consider providing financial support for mariners who need to be repatriated.“Charterers at this point do need to share costs and assume the delays they might face,” said Laura Carballo, head of maritime law and policy at World Maritime University in Malmo, Sweden. “That’s their biggest argument: it’s about the delays. Sorry, we’re all facing delays right now. The world is only running because seafarers are doing their job.”Wichita, Kansas-based Koch Industries, which has interests spanning petroleum and agriculture, has instructed ship owners not to conduct crew changes while under charter, according to a person with direct knowledge of the terms and who asked not to be identified because the conversations were private. The requests were delivered verbally, not in writing.In response to questions about the stipulation, the company responded in a statement: “Koch works closely with vessel owners to ensure the safety and wellbeing of crew members. This is an issue we are watching closely and looking for ways to resolve.”Rotterdam-based Vitol has required ship owners not to make crew changes on some spot charters, according to people familiar with the company’s contract terms who asked not to be identified because they weren’t authorized to speak publicly. Vitol says that it has “sought to manage our shipping business in line with the standards outlined in the Neptune declaration.”“Wherever commercially and operationally possible we facilitate crew changes,” company spokesperson Andrea Schlaepfer said in a statement. “As a vessel owner and manager Vitol appreciates the challenges of the current situation but believes that with good management owners can maintain high standards of seafarer welfare.”The Neptune Declaration also calls on world leaders to change their port and border policies to ease the burdens on seafarers, following a September statement from consumer companies including Unilever Plc and Procter & Gamble Co. to do the same. Last month, the IMO recognized 55 countries that agreed to consider seafarers “essential workers” and encouraged nations that hadn’t yet to do so. That designation has no official definition, and the countries weren’t specific about what if any change it would bring to the port procedures.On Friday, the shipping industry raised concerns that, while the number of seafarers stranded has dropped since its peak, the improvements could be short-lived as governments and port authorities respond to the threat of new Covid-19 variants with stricter restrictions. Seafarers, many of whom are from developing countries, may also miss out on the ongoing vaccination drives, risking further delays and supply chain disruption.“The crisis is still ongoing,” said Guy Platten, secretary general of the International Chamber of Shipping, which represents more than 80% of the world’s merchant fleet. “Governments will not be able to vaccinate their citizens without the shipping industry or, most importantly, our seafarers.”(Updates with recent statements from the shipping industry on the threat of new Covid-19 variants to efforts to relieve seafarers. )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.