Ethereum appeared in 2015, that is, much later than the formation of the first BTC block. In terms of capitalization, it also lags far behind Bitcoin ($800 billion to $381 billion). But some services on the internet show that the interest of users in Ether is much higher than in Bitcoin. Why is Ethereum popular with crypto investors? Will the rate of the cryptocurrency grow further, and will it overtake Bitcoin?
Why Ethereum Is Interesting for Crypto Investors
In terms of long-term investment prospects in a cryptocurrency overview, Ethereum looks more attractive than its competitor. Even though initially the release of coins was not limited, after the London fork, the coin burning mechanism began to work effectively. This limited the rate of issuance, and also contributed to the strengthening of the coin.
The internal inflation of the coin is several times lower than that of Bitcoin. Therefore, Ether is of interest to large investors as a tool for risk diversification. Many see Ethereum as a way to save capital from the increasing inflation of the traditional fiat currency.
Besides, the popularity and growth of the rate are also due to an increase in interest in the field of non-fungible tokens and decentralized finance. Since Ethereum is turning into a deflationary tool, it can be used as a store of value.
Increased popularity among investors and users is also facilitated by media coverage. Recently, Ethereum has given many reasons to mention itself on the pages of media platforms:
- development and popularity of the decentralized finance market;
- capitalization growth and possible flipping in the foreseeable future;
- transition to Ethereum 2.0 and the consequences of this phenomenon;
- NFTs and their use for profit.
All this attracts not only institutional but also small investors to buy cryptocurrency and exchange cryptocurrency. Demand increases and, as a result, leads to an increase in the rate concerning other financial instruments. The main indicator of the reliability of a currency is its capitalization. This indicator reached its maximum in November 2021, when the rate broke through another resistance line. You can find the current price of Ethereum on Changelly’s live charts.
Representatives of Goldman Sachs believe that ETH is ideally suited to become the most popular store of value in the digital world. Analysts at 8848 Invest and EXMO recommend investing in Ethereum for a period of 3 to 5 years with the possibility of high profits.
Can Ethereum Beat Bitcoin?
Bitcoin and Ethereum are the most popular digital assets for futures, as these cryptocurrencies have the most volume and liquidity. The popularity of futures in itself is due to the ability to open positions on an asset with leverage, that is, to sell/buy an asset using the borrowed funds of the exchange against your own security.
According to Decrypt, the increased interest in Ethereum derivatives indicates healthier demand relative to the altcoin compared to the same indicator for Bitcoin. Institutional investors play a special role in this — large organizations that may soon begin to inject large capital into the ETH futures market.
By the way, it is easy to determine the ratio of demand for trading instruments: as a rule, the greater the positive difference between the futures price and the price of the underlying asset, the more popular the derivative.
At the same time, analysts found that the reserves of crypto exchanges in Ethereum fell. The logic here is simple — the decrease in the reserves of exchanges indicates a massive withdrawal of coins from the trading platforms. This is because customers withdraw ETH to “cold” wallets for long-term storage, thereby reducing the pressure on the market from sellers.
The stronger this trend, the faster the ETH rate will rise in the future. Despite the recent collapse of the crypto market, this fundamental factor indicates the willingness of investors to keep the coin even under the most negative scenario for cryptocurrencies.
At the same time, the head of the US Securities and Exchange Commission, Gary Gensler, can create problems for the cryptocurrency market. He will seek regulation of the entire digital asset industry, said Mike Novogratz, a billionaire and founder of Galaxy Digital investment fund.
Many of the digital assets have the features of securities, so the crypto industry needs protection from ordinary investors.
However, the current situation in the futures market in any case has a good effect on the niche of cryptocurrencies in general. Whichever of the top coins is preferred by investors, what is happening, in any case, contributes to the popularization of digital assets. Therefore, the leadership of Bitcoin in these conditions is not critical.
