The two big names in the $2.2 trillion cryptocurrency market remain Bitcoin and Ether, the coin that fuels the Ethereum network.

The world’s the second largest cryptocurrency, Ethereum (ETH-USD) broke $4,000 barrier on Monday and analyst attribute the surge in prices to bullish market sentiment. The two big names in the $2.2 trillion cryptocurrency market remain Bitcoin and Ether, the coin that fuels the Ethereum network, according to a report from Bloomberg.

Meanwhile, bitcoin (BTC-USD), the most popular cryptocurrency, was hovering just over $58,000. Talal Tabbaa, coo and co-founder, Jibrel Network, said: “Bitcoin has solidified it’s position as the world’s digital gold, but Ethereum is making a case for becoming the world’s financial settlement layer. The Ethereum blockchain is home to the majority of innovation in crypto and has the most developer activity. The Ethereum Improvement Proposal (EIP) 1559 which was recently approved, completely redefines the Ethereum fee structure and the market is now pricing that in. Deribit (one of the largest derivatives exchanges) recently added ETH futures with a strike price of $50,000, which shows how bullish some investors are!”

Ethereum’s gains over the last few month have outpaced it significantly, The breakout rise has been pegged to the growing number of developers building decentralised finance or “DeFi” applications on its blockchain platform, as well as a growing institutional interest in crypto as a market.

Blockchain enthusiast and tokenomics expert, Eloisa Marchesoni, said: “So long as memory serves, the crypto markets have always been pegged to “GrandFather” Bitcoin. Where Bitcoin went, there the markets followed. Alternative crypto assets have always been subjective in their value; crypto could only exist and thrive in sofar as Bitcoin did. Sovereignty within the digital economy was nonexistent. This is known as the great crypto coupling. This means the markets capacity and its constituent actors (the different variations of cryptos) is dictated by the frameworks and capacities of what the market is pegged to.”

Marchesoni says that today, with Ethereum and DeFi, we have finally removed the boarders and created a runway for value creation because each crypto is now sovereign in terms of its viability of existence.

“There are no boarders on the actual growth potential of each independent crypto. It may be noted one crypto’s well being is not subjective to any other crypto, the potential for radical price divergences happens — this is of course a super healthy thing for the prospect of a digital economy.”

What is driving the interest and rise of ethereum?

At this moment in time, Ethereum arguably has more potential for more real-world applications, prompting a wider ecosystem than Bitcoin. Currently, plenty of DeFi applications are being built such as Uniswap, MakerDAO and Chainlink to name a few, as well as supporting smart contracts and NFTs. Granted, some of Ethereum’s success can be attributed to Bitcoin and the interest in crypto assets it has created. With far more activity and increasing numbers of users projected for Ethereum, thanks to the number of applications being built on it.

“I expect it will cause the overall network value to increase, and, in turn, the price of Ether could increase at a quicker pace. In fact, this all-time high for Ethereum is sparking discussions about BTC and ETH ‘decoupling’ right now,” added Marchesoni.

Can BTC and ETH co-exist?

The market will have to wait and see what kind of real impact the ongoing Ethereum upgrades could have on its native currency because the final phase of the process is scheduled to be completed in 2023. But a major fundamental upgrade on the network underpinning ether could lead its price to move on its own fundamentals, instead of merely following bitcoin’s price.

“The heart of ETH 2.0, which makes the entire system possible, is ether. ETH will not only be Ethereum’s native store of value asset and fuel for transactions, but will also be Ethereum’s ultimate source of security from its role in the proof-of-stake system,” concluded Marchesoni. —

Sandhya D’Mello

Journalist. Period. My interests are Economics, Finance and Information Technology. Prior to joining Khaleej Times, I have worked with some leading publications in India, including the Economic Times.

(Excerpt) Read more Here | 2021-05-10 10:09:45
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