Ethereum (ETH) is a little known alternative cryptocurrency that has seen a massive growth over the past few months. It currently sits in second place in terms of market cap, behind Bitcoin (BTC), and has seen its price surge by over 1,000% since January. However, ETH has many hurdles that Bitcoin does not, and it is unlikely to overtake it anytime soon.
Bitcoin has had a good year in 2017. It’s up over 300%, despite an increased regulatory scrutiny in the wake of its price surge. While this may not seem impressive, Bitcoin isn’t the first cryptocurrency to experience such growth, and it won’t be the last to see such growth either. For one, you can’t ignore its market cap, which overtook the market cap of all other cryptocurrencies combined in early January.
Bitcoin has been around the longest cryptocurrency has been around. Bitcoin has grown in reputation and price and is currently the most popular cryptocurrency. Ethereum, however, is a coin that is behind Bitcoin, and is not only far behind in popularity but also in the technology it uses. Ethereum is often referred to as the “Ethereum killer.”
Bitcoin’s (BTC) market capitalization exceeded $800 billion after a 13 percent increase in two days, reaching its biggest level in 79 days. Ether (ETH) gained 45 percent in two weeks, putting the network’s market value at $340 billion.
Positive anticipation for the London hard fork and its possible deflationary impact certainly helped, but some investors are still unsure how Ether’s price compares to Bitcoin’s. Some, such as Pantera Capital CEO Dan Morehead, believe Ether will eventually overtake Bitcoin as the most popular cryptocurrency.
Market investors may have been encouraged by Minneapolis Federal Reserve President Neel Kashkari’s suggestion that the Fed may extend its asset-purchase program. The proliferation of the Delta variety and its possible damage to the labor market were mentioned as reasons.
“Delta may deter individuals from returning to professions that require face-to-face contact, as well as keep children out of schools.”
Extending the stimulus for longer increases the danger of inflation, making scarce assets like real estate, commodities, stocks, and cryptocurrencies more appealing. These macroeconomic developments, on the other hand, should have an equivalent effect on Bitcoin and Ether.
Bitcoin has a distinct advantage in terms of active addresses.
If certain of Ethereum’s indicators are compared, it may be possible to determine if Ether’s 58 percent discount is warranted. The initial step should be to count how many active addresses there are, eliminating those with low numbers.
Addresses having a balance of $1,000 or more. CoinMetrics is the source of this information.
Bitcoin has 6 million addresses worth $1,000 or more, as seen above, with 3.67 million established since 2023. Ether, on the other hand, has less than half of the 2.7 million addresses having $1,000 in it. The altcoin’s growth has been sluggish as well, with just 2.4 million produced since 2023.
This statistic is 55% lower for Ether, confirming the market capitalization disparity. However, the amount of money invested by big customers is not included in our study. Although there is no reliable method to calculate this figure, gauging bitcoin exchange-traded products may be a reasonable approximation.
On exchange-traded products, ether lags.
Cryptocurrency goods that are traded on the open market. Bloomberg and Investing.com were used as sources.
The effect of combining data from various exchange-traded products is eye-opening. Bitcoin has the most assets under control, with $32.3 billion, while Ether has $11.7 billion. Because its product was introduced in September 2013, Grayscale GBTC plays a critical part in this difference.
Meanwhile, the XBT Provider Ether Tracker became Ether’s first exchange-traded product in October 2017. This discrepancy helps to explain why Ether’s total is 64% less than Bitcoin’s.
The price disparity is justified by the open interest in futures contracts.
Finally, data from futures markets should be compared. Because it reflects market participants’ entire number of contracts, open interest is the best indicator of professional investors’ real holdings.
A trader might have purchased $50 million in futures and then liquidated the whole position a few days later. This $100 million in traded volume represents no market exposure at this time, therefore it should be ignored.
Bitcoin futures have a large amount of open interest. Bybt is the source.
Open interest in bitcoin futures is now $14.2 billion, down from a high of $27.7 billion on April 13. With $3.4 billion, Binance is the most valuable exchange, followed by FTX with $2.3 billion.
The open interest in ether futures is summed. Bybt is the source.
On the other side, open interest in Ether futures peaked at $10.8 billion a month later, and the indicator is now at $7.6 billion. As a result, it is 46 percent less than Bitcoin’s, explaining the value discount.
Related: Ethereum market cap hits $337 billion, surpassing Nestle, P&G, and Roche
Other indicators, like as on-chain data and miner earnings, indicate a more balanced picture, although the two cryptocurrencies have distinct applications. For example, more than a year has passed since 54 percent of the Bitcoin supply was created.
The reality is that every indication has a negative side, and there is no conclusive measure for determining if a cryptocurrency is above or below its fair value. However, the three measures examined show that, when priced in Bitcoin, Ether’s upside does not indicate a “flippening” anytime soon.
The author’s thoughts and opinions are entirely his or her own and do not necessarily represent those of Cointelegraph. Every investing and trading decision has some level of risk. When making a choice, you should do your own research.
As we all know, Bitcoin is the largest and most famous crypto-currency, but it’s not the only one available to use! It seems that Ethereum is on everyone’s lips lately, and for very good reasons. I personally find it very easy to understand, and the smart contract functionality it provides is something that everyone should know about.. Read more about flippening meaning and let us know what you think.