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

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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.

Story continues

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

See more from Benzinga

Ethereum, Litecoin, and Ripple’s XRP – Daily Tech Analysis – March 20th, 2021

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Ethereum

Ethereum rose by 1.86% on Friday. Partially reversing a 2.63% loss from Thursday, Ethereum ended the day at $1,809.38.

A bearish start to the day saw Ethereum slide to an early morning intraday low $1,734.29.

Ethereum fell through the first major support level at $1,740 before rallying to a late intraday high $1,840.69.

The rally saw Ethereum break through the first major resistance level at $1,832 before falling back to sub-$1,810 levels.

At the time of writing, Ethereum was down by 0.41% to $1,802.01. A mixed start to the day saw Bitcoin rise to an early morning high $1,812.58 before falling to a low $1,801.29.

Ethereum left the major support and resistance levels untested early on.

For the day ahead

Ethereum would need to avoid a fall through the pivot level at $1,795 to support a run at the first major resistance level at $1,855.

Support from the broader market would be needed, however, for Ethereum to break out from Friday’s high $1,840.69.

Barring an extended crypto rally, the first major resistance level would likely cap any upside.

In the event of a breakout, Ethereum could test resistance at $1,950 before any pullback. The second major resistance level sits at $1,901.

Failure to avoid a fall through the $1,795 pivot would bring the first major support level at $1,749 into play.

Barring an extended sell-off, however, Ethereum should steer clear of sub-$1,700 levels. The second major support level sits at $1,688.

Looking at the Technical Indicators

First Major Support Level: $1,749

Pivot Level: $1,795

First Major Resistance Level: $1,855

23.6% FIB Retracement Level: $1,579

38.2% FIB Retracement Level: $1,292

62% FIB Retracement Level: $830

Litecoin

Litecoin rose by 0.09% on Friday. Following a 3.13% slide on Thursday, Litecoin ended the day at $199.91.

A choppy start to the day saw Litecoin saw Litecoin slide to an early morning intraday low $195.80 before making a move.

The reversal saw Litecoin fall through the first major support level at $196.

Story continues

Coming within range of the 23.6% FIB of $195, Litecoin rallied to a late morning intraday high $204.95.

Falling short of the first major resistance level at $206, however, Litecoin eased back to end the day at sub-$200 levels.

At the time of writing, Litecoin was down by 0.39% to $199.14. A mixed start to the day saw Litecoin rise to an early morning high $200.17 before falling to a low $198.73.

Litecoin left the major support and resistance levels untested early on.

For the day ahead

Litecoin would need to move back through the $200 pivot level to support a run at the first major resistance level at $205.

Support from the broader market would be needed, however, for Litecoin to break out from $200 levels.

Barring an extended crypto rally, the first major resistance level and Friday’s high $204.95 would likely cap any upside.

In the event of an extended rally, Litecoin could test resistance at $215 before any pullback. The second major resistance level sits at $209.

Failure to move back through the $200 pivot level would bring the first major support level at $196 and the 23.6% FIB of $195 into play.

Barring an extended sell-off, Litecoin should steer clear of sub-$190 support levels. The second major support level at $191 should limit the downside.

Looking at the Technical Indicators

First Major Support Level: $196

Pivot Level: $200

First Major Resistance Level: $205

23.6% FIB Retracement Level: $195

38.2% FIB Retracement Level: $163

62% FIB Retracement Level: $110

Ripple’s XRP

Ripple’s XRP fell by 0.37% on Friday. Following a 0.25% decline on Thursday, Ripple’s XRP ended the day at $0.46727.

A bearish start saw Ripple’s XRP fall to an early morning intraday low $0.45902 before making a move.

Ripple’s XRP fell through the 38.2% FIB of $0.4632 and the first major support level at $0.4602.

Finding morning support, Ripple’s XRP struck a mid-day intraday high $0.47499.

Falling short of the first major resistance level at $0.4839, however, Ripple’s XRP fell back to sub-$0.47 levels and into the red.

At the time of writing, Ripple’s XRP was down by 0.34% to $0.4657. A mixed start to the day saw Ripple’s XRP rise to an early morning high $0.46672 before falling to a low $0.46557.

Ripple’s XRP left the major support and resistance levels untested early on.

For the day ahead

Ripple’s XRP will need to move through the $0.4671 pivot level to bring the first major resistance level at $0.4752 into play.

Support from the broader market would be needed, however, for Ripple’s XRP to break out from Friday’s high $0.47499.

Barring an extended crypto rally, the first major resistance level would cap any upside.

In the event of an extended rally, Ripple’s XRP could test resistance at $0.4850 before any pullback. The second major resistance level sits at $0.4831.

Failure to move through the $0.4671 pivot would bring the 38.2% FIB of $0.4632 and the first major support level at $0.4592 into play.

Barring an extended sell-off, however, Ripple’s XRP should steer clear of sub-$0.45 levels. The second major support level at $0.4511 should limit the downside.

Looking at the Technical Indicators

First Major Support Level: $0.4592

Pivot Level: $0.4671

First Major resistance Level: $0.4752

23.6% FIB Retracement Level: $0.5320

38.2% FIB Retracement Level: $0.4632

62% FIB Retracement Level: $0.3521

Please let us know what you think in the comments below.

Thanks, Bob

This article was originally posted on FX Empire

Ethereum network in a fee spin: Can the Berlin upgrade save the day?

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Though Ether’s (ETH) value has continued to showcase increasing signs of stability around the $1,800 range over the past fortnight or so, users of the premier altcoin’s network have been faced with rising gas fees as well as increasing network congestion issues. To put things into perspective, since summer last year, a time when the DeFi boom was starting to peak, Ethereum’s network fees have more than doubled.

While this fee increase quite directly relates to ETH’s increasing value, there is no denying that it also clearly shows growing demand for ERC-20 tokens, stablecoins, as well as various decentralized finance-based offerings in general.

As is evident from the chart below, costs of facilitating transactions on the Ethereum network have increased significantly over the last few months, with the average transaction fee touching an all-time high of $39.49 on Feb. 23.

Not only that, on March 20, the average transaction fee is at $16, a price point that is quite high, especially for developers and those looking to facilitate small value transactions.

Also, as nonfungible tokens continue to gain mainstream traction, it stands to reason that transaction costs on the Ethereum network will continue to rise in the near future. Thus, until a viable scaling solution is implemented in the near term, network congestion and high transaction costs are likely to continue, especially as the NFT sector continues to thrive.

Is the network broken beyond repair?

Providing his thoughts on Etherum’s existing state of affairs, Jay Hao, CEO of cryptocurrency exchange OKEx, told Cointelegraph that Ethereum is definitely at a point of inflection along with other layer-one solutions, adding: “They are being forced to address their issues of rising fees and network congestion fast — or risk losing out to competitors who can offer lower fees and higher throughput.” He also added:

“Ethereum still has by far the largest developer community, as well as the number of DApps, built on it, but still, complacency is a killer.”

And while Hao does believe that Ethereum will eventually be able to cope with its issues at some point in the future, the crypto community no longer wants to wait until the transition to proof-of-stake and Eth2 has been complete, especially since an increasing number of developers and other network users are starting to expand their operations and switch to alternative ecosystems.

For example, many platforms have undertaken the integration of different versions of Tether (USDT) and USD Coin (USDC) — a la Algorand, Tron — allowing stablecoin traders to transact quickly and at a fraction of the cost currently being levied by the Ethereum network.

Moreover, an increasing number of EVM-compatible blockchains — OKExChain, Binance Smart Chain, etc. — have sprung up and are challenging Ethereum’s dominance. “Competition is healthy, and it forces the incumbents to do better and focus on providing users with the experience they deserve,” Hao opined.

However, Jack O’Holleran, CEO of Skale Labs — a decentralized Ethereum compatible layer-two PoS network — believes that the network’s rising gas fee issues will be alleviated as scaling efforts continue to be worked on, adding:

“The Ethereum mainnet will evolve into a base layer of security and settlement. Scalability layers will sit on top of Ethereum, providing functionality for smart contract execution and low gas fees. We will also see the rise of application-specific blockchains, which provide more price efficiencies with greater predictability.“

What is the Berlin upgrade?

After months of planning, the Ethereum community recently laid out its implementation timeline for “Berlin,” with the upgrade slated to go live on the Ethereum mainnet at block 12,244,000, or on April 14. In this regard, it bears mentioning that a total of four Ethereum Improvement Protocols will be deployed as part of Berlin.

These include EIP-2565, which seeks to reduce the cost of the ModExp precompile, which will help with calculating the gas cost; EIP-2929, a proposal that will “increase” certain gas costs; EIP-2718, which introduces a new transaction module; and lastly, EIP-2930, which includes a transaction type with optional access lists.

To help make the upcoming transition smoother, Ethereum node operators have been advised to upgrade their operations to nodes that are Berlin-compatible before April 7. That being said, exchanges, wallet service providers and Ether token holders are not required to make any modifications on their end.

Will “Berlin” really help ease Ether’s growing pains?

To gain a better perspective of whether the Berlin upgrade will really shake the Ethereum ecosystem up and help mitigate many of its existing issues, Cointelegraph spoke with Maxim Blagov, CEO of Enjin — a blockchain-based gaming and DApp ecosystem. In his view, the Berlin update is an important step toward creating a better user experience on Ethereum, especially in terms of estimating gas costs, adding:

“We can’t assume that it will have a significant impact on cost per transaction. Deep structural changes will need to be made in order to bring Ethereum in-line with user expectations. Newcomers to the NFT market often expect free, instant transactions, and unfortunately, nothing like this will be achievable on the current state of Ethereum.”

Additionally, “Winston,” a moderator for yield farming aggregator Harvest Finance, told Cointelegraph that he does not see any major fee reduction happening as a result of the upcoming Berling upgrade, adding: “There are few EIPs included that can help users save gas, but there is also EIP-2929, which actually increases fees in some transactions.”

Hao believes that while the upcoming update may help in reducing gas fees, by and large, the community will only start to see more satisfactory solutions to Ethereum’s problems in the mid-term. Furthermore, he added that while Berlin may be able to ease out gas fee problems temporarily, it will not be able to address the network’s long-term scalability issues.

In his view, Ethereum will need to work on incorporating rollups and other layer-two scaling solutions, such as Polygon, in order to provide meaningful and sustainable midterm solutions to its problems while Ethereum 2.0 is rolled out in its entirety.

However, providing a contrarian take on the matter, O’Holleran stated that the upcoming upgrade is quite robust and holistic in its outlook, and when combined with EIP-1559, it is an effort to make fees lower and more predictable:

“Miners will gradually be paid less over time, but in doing so, it will make Ethereum more usable and increase the value of the network, which, in turn, ends up being a win for both miners and developers if managed appropriately.“

EIP-1559 and more

The most anticipated upgrade to the Ethereum network — EIP-1559 — is slated to go live sometime in July. The proposal will be packaged along with the “London” hard fork and will seek to fix numerous issues with Ethereum’s user experience. For starters, it will look to redirect Ethereum’s native gas fee to the network itself instead of miners. This fee will then be burned, allowing for a gradual reduction in the total supply pool of ETH.

Related: Ethereum at a crossroads: Ether community turmoil over miner reward fees

On paper, the upgrade seems like a welcome change, however, it’s expected to reduce reward ratios by a whopping 50%, something that has irked Ethereum’s mining community so much that many have even advocated for a demonstrative network takeover — potentially threatening the security of the network.

Thus, with all of these moves aimed at fixing the fees issue laid out on the table, it remains to be seen how the Ethereum network will handle the increasing demand and if it can deliver a solution that is welcomed by all in a speedy manner.

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