Opinion Ethereum Network is generating its Bitcoin-Independent Market Impulse

Ethereum Network is generating its Bitcoin-Independent Market Impulse

January 23, 2021

Ether is the world’s second-largest cryptocurrency. Recently it managed to break its own record in terms of price and market capitalization. With the price tag of a single ETH token reaching 1,440 USD, the network did not shoot to the moon, but still managed to break the previous best result set in 2017. Now, it seems like this cryptocurrency network is doing better than ever before, especially when it comes to its relative independence from the moment on the BTC market. Also, many analysts are certain that the coming period will see ethereum further flirt with potential new highs.

These could very easily overcome the current record once again. It would be easy to conclude that the present moment of the ethereum market is simply a reaction to the overall happenings in the crypto domain. Yet, more and more evidence is showing that the ETH token is not simply a smaller version of the bitcoin network. Instead, the growing price independence actually shows a setup that is valuable on its own, not just as a mirroring of the BTC movement. The implications of that fact could have a huge impact on the future of the crypto market as a whole.

ETH Movement

A previous couple of days have been dynamite for the second-largest cryptocurrency in the world. In one 24-hour period, ETH token price went up 14 percent. This movement added 20 billion USD to the overall market value, which at that moment was 160 billion USD. The token was selling for around 1,440 USD and that took over the previous record by some 10 USD.

In comparison to bitcoin network performance, ETH is the clear winner in this timeframe. While BTC managed to move some 5 percent up, ETH did the same in a range of nearly 29 percent. That shows a clear tailwind forming behind ethereum and giving it that push. For many ETH investors and others in this crypto community, this is something they have been waiting for since 2017.

DeFi Potential

One of the main reasons why ethereum managed to gain so much traction in the recent period is its decentralized finance applications. Built on the ethereum blockchain, decentralized finance or DeFi have been a true multiplay of value for the network. Presently, the amount of value stored in these applications saw a recent increase of over 20 times. In February 2020, these had around one billion USD in ETH tokens stored inside of them.

Now, they have around 20.5 billion USD. The development scene is also showing a different kind of dynamic than that of bitcoin. Ethereum has more than five times the number of developers working on its protocols in comparison to those who are working on bitcoin. The additional good news here is that an influx of developers into any digital currency ecosystem usually includes a rise in the price of its native token. Also, the demand for the same token, in this case, ETH, most likely will drastically rise as well.

Diversification Needs

Presently, even with the drop in BTC price that came recently, bitcoin is drastically more valued than any of its competitors, including ethereum and litecoin. However, there is the notional that the traders are becoming increasingly mindful of warnings coming from the regulators. These government agencies like anyone in the world, have not been blind to the rise in crypto prices. That is why some form of cryptocurrency crackdown, more precisely that which would aim at bitcoin, could take place in the near future. Janet Yellen, President Joe Biden’s Treasury Secretary, said that cryptocurrencies possess a particular concealer.

They, in her eyes, come with a potential for terrorist funding that takes place in a strictly digital domain. That could herald an anti-money laundering campaign which would surely impact the confidence people have in bitcoin and with it, its price as well. Any such initiative will not be short-lived either, but possibly an ongoing campaign lasting months, if not years in the US. With that in mind, traders are looking to diversify their portfolios and make their crypto holdings more flexible in terms of tokens they have in their possession. The prime target for any such decision would be to buy ethereum tokens. Furthermore, if bitcoin fails to reach a price that is well beyond 41,000, the chance of a new collapse and a start of a bear market is also very possible.

Mixture of Advantages

The narrative that ethereum is something both different and in some ways better than bitcoin has been around for years. In the previous crypto bull run, some were suggesting that the flippening could take place. That process would see ethereum gradually overcome bitcoin in market capitalization and price of the token. However, the same idea is long-gone now even from the minds of the staunchest supporters of ethereum. With the sheer potential for branding and name recognition, bitcoin will remain the king of crypto for the foreseeable future, barring a completely devastating event from taking place. However, even such an event, for example, a huge glitch on the level of the core bitcoin network, would be terrible news for ethereum as well. In that case, a massive drop in BTC price would also take down everyone with it.

But, for now, the fact remains that ethereum is gradually building an ever-more independent ecosystem and moving it away from bitcoin. That process will continue thanks to two factors more than anything else. First is the potential of DeFi applications to change the landscape of modern finance, especially that of the space where esports, social media, video streaming, and other such ventures are set – the digital-only realms. The second fact is the essential diversification of crypto holdings which will also assess ethereum as being the silver of bitcoin’s gold. As long as those two are in place, the value of ethereum will continue to go up in its most basic terms. So, while the price of the ETH token will ebb and flow with daily events and happenings, the true value of the same cryptocurrency network will likely climb in the coming months and years.