There are many reasons why Ethereum underperforms Bitcoin in the short-term—some are financial, some are technical, and some are related to the underlying long-term project goals. Ethereum’s lead developer, Vitalik Buterin, has a personal goal to make Ethereum “the world computer.” Making a cryptocurrency the world computer is a lofty goal, and it’s not clear how he thinks he will achieve it.
Bitcoin is the largest cryptocurrency on the market by market cap (over $18 billion as of this writing), but it is not the only one. Some are predicting that Ethereum, which has a market cap over $1 billion, may soon surpass Bitcoin’s $18 billion. If this happens, Ethereum will become the 2nd largest cryptocurrency by market cap (over $10 billion). Many of the Ethereum community members believe that the current ETH price is very undervalued, and that the price will increase in the future. Today, I am going to outline 3 reasons why I think that Ethereum may underperform Bitcoin in the short-term.From 28. March to the 15th. In May, the price of Ether (ETH) surpassed the price of Bitcoin (BTC) by 173%. An incredible upward movement has seen the chip reach an all-time high of $4,380. However, when the crypto-currency markets were the 12. In May there was a sharp drop, the trend started to reverse and since then the price of Ether has dropped by 25%. Some might say this is a technical correction after a strong rally. While this explains some of the movement, it ignores some important factors, including the rapid development of competing smart contract networks and the fact that bitcoin was first introduced as an official currency. The price ofEther/Bitcoin on Binance. Source: TradingView Note that the ETH/BTC ratio of the 8. The month of June rose again, to 0.77, although the price of Ether is still 36% below its all-time high, hovering around $2,800. To understand what may be causing this relationship, analysts need to analyze the drivers of Ether and Bitcoin prices separately.
Mike Novogratz may have been misinterpreted in hisinterview.
The upward trend in Ether may have been driven by high valuations from institutional investors. Traders were able to take advantage of the sense of urgency known as FOMO and quickly shifted their bitcoin exposure to the leading altcoin. On the 13th. In May, New York magazine published an interview with Mike Novogratz, founder and CEO of Galaxy Digital. In his speech, Novogratz said: Suddenly decentralized finance and NFT appeared on Ethereum around the same time, with insanely accelerated growth. Novogratz was then asked how high Aether could reach, to which he replied: It is dangerous to make predictions about heights. But can it be $5000? Of course it is. While an Ethereum holder might have interpreted this as a prediction, others might have taken it as a wild guess, probably depending on the general situation in the crypto-currency market. About a week later, however, a report from Goldman Sachs revealed that the global investment bank believes Ether has a great chance of overtaking Bitcoin as the dominant store of value. Interestingly, one of the key quotes in the report comes directly from an interview Novogratz gave to The New Yorker.
At its peak, Binance Chain controlled 40% of DEXvolume
While Ethereum maintained its 80% net worth dominance in decentralized financial applications (DeFi), Binance Smart Chain (BSC) achieved a 40% market share on DEX exchanges. Daily volume of the DEXPancakeSwap compared to the top 10. Source: DeBank The successful growth of the DeFi industry and the non-transferable token (NFT) market has led to heavy congestion on the Ethereum network, pushing the median price to $37 in mid-May. This bottleneck caused a flow of activity to competing networks, and PancakeSwap was in the best position to capture this flow. Related: This is one reason why one analyst thinks bitcoin will outperform Ethereum in the near term. To make matters worse, key DeFi projects have moved to Binance’s Smart Chain, including yield aggregator Harvest Finance and decentralized exchange aggregator 1inch. Investors quickly realized that this trend could continue, as the competitive smart-contract network provides an easy solution for dApps looking for cheaper alternatives.
No country adopts Ethereum
Bitcoin has underperformed over the past 30 days, failing multiple times to break through the $42,000 resistance. However, an important step was taken when El Salvador obtained the right to vote on 12 December. June became the first country to make bitcoin a legal tender. After the Central American country made a legal decision, several other Central and South American countries began to discuss the merits of a similar road. Ethereum is undergoing a redesign that will change the speed of issuance and how organizations are paid to secure the network by dropping the proof-of-work model. In the meantime, Bitcoin is ensuring that all updates are backward compatible and adhering to its strict monetary policy. This is the main reason why Ether will not overtake Bitcoin in the next 12 months, or at least until there is a better understanding of how Ethereum’s smart contract network dominance will play out. Professional investors avoid uncertainty at all costs, and the cryptocurrency markets have had enough. Institutional investors simply have no reason to ignore the risks while competing networks eat Ethereum’s lunch. The views and opinions expressed herein are those of the author and do not necessarily reflect those of Cointelegraph. Every investment and every stage of trading involves risk. You should do your own research before making a decision.
Frequently Asked Questions
Why are Bitcoin and ethereum correlated?
Ethereum is a blockchain-based, decentralized application platform that runs smart contracts. Why would a digital currency that can compete with Bitcoin be correlated with it? This is not a prediction, but rather an observation. Bitcoin is one of the most successful and oldest cryptocurrencies, and its price has been surging during the past few months. Ethereum’s price has been fluctuating, but its recent spikes are a result of the speculation around the launch of the platform’s new main net. It is likely that, with the launch of the platform, the price of Ethereum will stabilize and begin to follow the Bitcoin price movements. As the most popular Cryptocurrencies, Bitcoin and Ethereum are two of the most heavily traded coins. However, there are some important differences between the two.
What are the benefits of ethereum?
Ethereum is an open source, public, blockchain-based distributed computing platform that is still in its infancy. However, it is already gaining increasing popularity, even in the face of increasing competition from the likes of Bitcoin and Ripple. However, when looking at the future of public blockchains, Ethereum’s recent price decline may be a sign of more trouble ahead for ethereum investors. Ethereum is a great project with great potential, but it faces serious issues that will likely hamper its growth. The main problem is that the Ethereum community is so small. It doesn’t have enough developer resources to create new projects with scaling in mind, it doesn’t have enough community support to provide feedback and support to projects, nor enough of a merchant base to provide liquidity. All of these issues is preventing the network from scaling to the level that the developers would like to see. As a result, many users are running into issues with scaling, and as a result, they are experiencing delays in transaction processing. This could cause businesses to lose faith in the network and leave, which will be a bad thing for Ethereum as a whole.
Is ethereum more important than Bitcoin?
After the success of Ehtereum’s crowdsale, the price of Ether (which was still in its infancy, but has since gone on to gain over 1,000% in price) has seen a massive surge in value. This has led many to declare Ehtereum to be a more powerful and important cryptocurrency than Bitcoin. This may well be true, but Bitcoin still has a lot of great features that make it a very useful and viable payment system. Additionally, Ehtereum’s mining difficulty is so high that it may have to fork multiple times before it can become the universal payment system that Ethereum is aiming for. In the meantime, Bitcoin still has a lot of great features that make it a very useful and viable payment system There are three reasons why Ethereum may underperform Bitcoin in the short-term: (1) It is not clear that Ethereum is a better technology than Bitcoin. (2) It has a lower token value, which makes it more volatile. (3) The Ethereum community is not as experienced and does not have as much hashing power as the Bitcoin community.
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