Ether’s growth as a standalone asset fuels the narrative that it will surpass BTC

The Ether (ETH) narrative that it quickly turns into an independent asset has been around for a while. In the last few months, however, this idea has become more and more important, as shown by the fact that since October 1st, ETH has shown a clear move north towards Bitcoin (BTC).

To put things in perspective, in early November the month-long correlation between the BTC / ETH pair fell to 60%, the lowest level in the decade of the coin’s history. While Bitcoin posted gains of 105% year-to-date, Ether rose an impressive 505%, outperforming the flagship cryptocurrency nearly five times.

That ether is gaining the upper hand is perhaps best reflected in the fact that the ETH / BTC pair has continued its uptrend for the past two months despite a significant general market decline since early December. Even when the value of BTC fell below $ 50,000 again, the price of the ETH / BTC pair continued to accumulate in value, rising quickly by around 13% and thus reaching a three-year high.

The “flippy” story

Ether’s growth as a standalone asset fuels the narrative that it will surpass BTC
Ether’s growth as a standalone asset fuels the narrative that it will surpass BTC

Speaking to Binance’s research wing, a spokesman for the cryptocurrency exchange Cointelegraph said the aforementioned activity – in which ETH won a large amount of independent market support against Bitcoin – was quite unusual considering the ETH / BTC pair tend to rise only during bull runs and add: “This is not to say that ETH has already decoupled from BTC, but it clearly shows that not all altcoins are correlated with BTC movements.” The spokesman continued:

“It is important to realize that ETH may no longer be viewed as an altcoin, but rather as a token with its unique properties. The main drivers of the recent surge can be attributed to the growing narratives from Metaverse, GameFi and NFT which are largely based on the ETH- Build network measured. “

Although the ETH is far from being completely decoupled, The spokesman stressed that such a vision can no longer be viewed as a pipe dream as the overall narrative is already beginning to change thanks to the emerging new use and adoption cases of Ethereum.

In addition, the analyst suggested that a similar scenario could play out for a number of other prominent altcoins: “As with traditional stocks, there will be no difference between ‘BTC and Alts’, instead the prices of all tokens will be determined independently of systematic and unsystematic risks.”

Igneus Terrenus, head of communications for the Bybit cryptocurrency exchange, told Cointelegraph that the value of a digital asset is ultimately determined by its supporters and investors, and with more than six years of development and a plethora of uses of smart contracts built on top of Ethereum (including those related to emerging fields like DeFi and NFT), the premium altcoin has now developed an identity and ecosystem of communities that exist independently of BTC, particularly in the last year. “There will still be overlap, but now there is enough difference to maintain a divergence in price action.” Terrenus said, adding:

“As the demographics of the BTC and ETH areas continue to diverge, we also expect their respective price promotions to gradually dissolve further.”

ETH has a unique position in the market

Netta Korin, The co-founder of Orbs, a public blockchain infrastructure, told Cointelegraph that ETH’s direct northward movement from October 1 further fueled the narrative that ether might actually switch to Bitcoin at some point in the near future. Although the vast majority of other cryptocurrencies continue to have a high correlation with BTC, he said that ether is clearly proven to be “Fuel for DApps”.

Korin added that Ethereum has long overtaken Bitcoin as the most widely used blockchain and has performed significantly better than BTC even when recovering from market cool-downs. Additionally, he stated that the upcoming Eth2 update “will improve the demand outlook,” adding:

“Ethereum’s new supply and demand mechanisms and its position as the leading financial infrastructure and crucial backbone for some of the most popular projects such as MakerDAO and Uniswap make the decoupling from ETH possible.”

Korin also noted that Ethereum is a major player in DeFi and a core platform for the NFT space that aims to develop financial applications for lending and trading on the blockchain – of which more than 3,600 DApps are currently on the Ethereum. Run ecosystem. . Additionally, Ether could also act as a hedge against inflation because of its ties to DeFi and the NFT market, two areas it believes will grow exponentially in 2021. “Ether is well on the way to overtaking Bitcoin as the top cryptocurrency by market capitalization.” closed.

Could ETH’s continued independence help stimulate BTC?

If the dissolution of ETH is imminent, will this affect any potential upward movement in BTC as the ETH / BTC pair begins to grow? In this regard, a member of Binance’s research wing pointed out to Cointelegraph that if the price differential between the ETH / BTC pair continued to grow on its current course, it would still be incorrect to say that development could lead to growth momentum . General information for BTC, with a note:

“Big investors will continue to buy BTC no matter how pessimistic it appears on the charts or the performance of other tokens. They do so because BTC persists.” […] the pioneer in space travel and the market driver. This is fueled by the narrative that BTC is a digital store of value and a hedge against inflation.

With that in mind, the Binance analyst admitted that if you look at the other end of the spectrum, he still expects frenzy among private and institutional investors. as they are rushing to increase their presence at ETH.

The growing weight of ether in the market has not gone unnoticed by major financial institutions around the world as it is mature and evolving. According to the company’s research analysts, ETH’s five-fold increase over BTC over the past year has resulted in Altcoin accumulating a market cap almost half the size of Bitcoin’s.

Another aspect of ETH that has made many investors sit up and take notice is the network’s potential to gain a foothold in the emerging Web 3.0 ecosystem, which despite its implementation is currently very popular in reality. The real world is still years away. While no one can be sure how this space will develop, the chances are good that in the future ETH will take on much of the value that is associated with the decentralized Web 3.0.

Last but not least, it’s worth noting that the recently implemented update of the Ethereum network London – which went live in August 2021 – changed the way the currency’s gas prices are calculated, effectively burning some of all ETH-based fees and reducing the total number of altcoins became supply pool. The numbers have caused Ether’s annual inflation rate to drop from ~ 4% to ~ 3%.

Additionally, Ether’s ever-evolving monetary policy is designed to help deflationary assets and make them attractive to long-term owners as well as institutional funds. Hence, it makes sense that the perception of ether as a standalone asset will only find more support.

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