In the second half of 2020, institutional investors and large capital saw a growing interest in cryptocurrencies. However, all of the whales’ attention, as well as all of the public’s attention, has been turned to Bitcoin (BTC). Today we will examine why Ether (ETH) is a more attractive asset and why this cryptocurrency should become the “first cryptocurrency” for every investor.
Let’s start with the numbers: ETH’s growth since its March 2020 low after the coronavirus-induced market crash has been 1,200%, while BTC has only grown by 700%. ETH’s growth since its March 2020 low after the coronavirus-induced market crash has been 1,200%, while BTC has only grown 700%. Of course, given the record highs for Bitcoin, the price of which hit $ 40,000, Ether’s rise to $ 1,400 doesn’t seem that impressive. In addition, the market capitalization of ETH is five times smaller than the volume of the BTC market. But what is more important to an investor: nice numbers and records of an asset in a portfolio or high returns?
There are very strong reasons to believe that ether will continue to rise in price in 2021 and bring investors more profit than the “most famous cryptocurrency” Bitcoin.
Connected: The ETH price sets a new all-time high and is gaining financial momentum to go further
Demand among developers
Ethereum is the number one platform for creating blockchain projects and launching decentralized applications. The table below shows the number of unique ERC-20 tokens that have been traded in the first few years since the Ethereum network started. And despite the fact that the rate of expansion of the market for blockchain startups has slowed since the first coin supply bubble burst in 2018, their total numbers are still growing.
And despite the fact that Ethereum has serious competitors like Tron, Polkadot, Cardano, Cosmos and Tezos, Vitalik Buterin’s cryptocurrency platform continues to lead in that direction.
Growing transaction volume
In 2020, transactions worth more than $ 1 trillion were recorded on the Ethereum blockchain. These numbers exceed the transaction volume of payment giants like PayPal, which is used by over 350 million users and whose average volume generally does not exceed $ 200 billion per quarter.
Also note that there are network fees paid for every transaction at ETH. And since the network’s growth rates are still high, we can confidently assume that the “upward trend” at ETH will continue. In any case, interest in cryptocurrency increases, as does the number of active wallets, the number of transactions on the network, and the average transaction size.
Development of the DeFi sector
Despite Bitcoin’s leadership in the cryptocurrency market, Ethereum remains the leader in the young decentralized financial industry. The DeFi loan and equity projects, very popular in summer 2020, continue to grow and attract new investments.
Connected: Was 2020 a “DeFi year” and what is expected of the industry in 2021? Experts answer
The total value of decentralized funding since early 2020 has increased nearly 3,300% from $ 687 million to $ 23.2 billion. And Ethereum is the main platform for creating and launching most of the new DeFi projects and stablecoins.
The emission of stablecoins is constantly increasing as digital assets backed by the value of less volatile fiat currencies are a very handy tool for quick settlement between users, forming trading pairs on crypto exchanges and saving capital from high volatility in yours Crypto wallet are.
Regardless, we should talk about the interest of institutional investors in decentralized financing. While the chaos on the DeFi market in summer 2020 almost undermined institutional confidence in the potential of blockchain in the financial sector, public companies continue to show interest in the new type of asset.
In August 2020, Archax and Algorand revealed plans to develop tools to introduce DeFi to institutions. In the fall of 2020, it was announced that xSigma, a subsidiary of the Nasdaq-traded ZK International, was working on the development of DeFi services and was preparing for the introduction of a decentralized exchange for trading stable coins.
We all remember what major investors’ attention to Bitcoin led to over the past year, right? Now it looks like other areas of the cryptocurrency industry are doing the same, and some of them are directly related to Ethereum. The main advantage of Ethereum lies in the versatility of its technology and its growing community.
This article does not contain any investment recommendations or recommendations. Every step of investing and trading involves risk and readers should conduct their own research in making their decision.
The views, thoughts, and opinions expressed here are the sole rights of the author and do not necessarily reflect or represent the views and opinions of Cointelegraph.
Nick Bel is a cryptocurrency enthusiast and tech writer based in London. He is passionate about finance and new technologies like blockchain, cryptocurrency and artificial intelligence.