The strengthening of ETH will set off the "leading" battle again
Editor's Note: This article comes fromHoneycomb Finance News (ID: fengchao-caijing), Author: Kyle, reproduced by Odaily with authorization.
Editor's Note: This article comes from
Honeycomb Finance News (ID: fengchao-caijing)
Honeycomb Finance News (ID: fengchao-caijing)
, Author: Kyle, reproduced by Odaily with authorization.
ETH hit $1,481 on January 25, a new all-time high. Thanks to this wave of gains, ETH continues to narrow the gap with BTC's circulating market value. As of January 27, the circulating market value of ETH reached 145.91 billion US dollars, while that of BTC was 581.99 billion US dollars. The circulating market value ratio of ETH to BTC has increased by 5% in the past 4 months.
Before ETH peaked, the encrypted asset market experienced a wave of corrections. BTC has fallen by 23.7% from its historical high, while ETH's retracement rate is only half of that of BTC.
The value storage function of BTC has been amplified under the current monetary quantitative easing policy in the United States, while the value sources of ETH are more diverse. In addition to the intervention of institutional funds, DAPP built on the Ethereum network has injected value into ETH.
The competition between ETH and BTC is actually a competition between the application value and stored value of encrypted assets.
From the data analysis on the chain, with the development of DeFi applications on Ethereum and the upgrading of the network itself, the number of active addresses of ETH has increased faster than that of BTC in the past year. The total lock-up value of its DeFi protocol has also increased from US$600 million at the beginning of 2020 to US$34 billion today.
ETH is currently gaining momentum, and the market value gap with BTC is still large. To catch up with the "coin king", the further landing of the Ethereum 2.0 network will have a turning point.
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Big V predicts that "the market value of ETH will exceed BTC"
After hitting an all-time high of $41,950 on January 8, BTC has fallen back to around $32,000, a drop of 23.7%. On the other hand, ETH, which ranks second in market value, has stepped out of the independent market. On January 25, Ethereum touched $1,481, which continued to set a new record high. It has now retreated to around $1,300, with a retracement rate of 12%, which is only BTC. half of the withdrawal rate.
During the downturn of BTC, the leader of encrypted assets, ETH can be said to rise against the market, and the gap between the circulating market value of BTC and BTC has gradually narrowed.
According to the data of Feixiaohao on January 27, the circulating market value of ETH was 145.91 billion US dollars, accounting for about 25% of the market value of BTC 581.99 billion US dollars. At the beginning of this round of bull market (early October 2020), the circulating market value of BTC was 196.5 billion US dollars, and the circulating market value of ETH was 39.8 billion US dollars, accounting for about 20.2% of the total market value of BTC. This shows that during this round of bull market, the rise of ETH is more impressive than that of BTC.
Especially in the past month, ETH has performed significantly better than other mainstream assets. Feixiaohao data shows that in the past month, ETH has increased by 102.1%, while in the same period, BTC has increased by 21.79%, BCH by 24.45%, and LTC by -2.5%.
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The trend of ETH in the past month is better than other mainstream assets
The visible strength of ETH has become the subject of heated discussions in the industry, and the battle for the leadership of encrypted assets has been discussed again.
On January 22, Jiang Zhuoer, the founder of Lebit Mining Pool, boldly predicted on Weibo that in the next bull market cycle, the total market value of ETH will permanently exceed the total market value of BTC; the total market value of tokens running on ETH will be 5-100 times that of Total market capitalization of BTC. He believes that BTC is equivalent to currency freedom, while ETH is equivalent to currency freedom and contract freedom. "1+1 is not greater than 2, but will produce complex chemical reactions and generate everything."
Jiang Zhuoer made an analogy. If BTC is compared to digital gold, then ETH is the Internet, and many various applications (companies) run on it. "The network has a very strong scale effect, which is far greater than stored value. You can use houses, stocks, and even antiques to store value, but in terms of the network, you can only use the largest network."
Cointelegraph columnist NICK BEL also believes that due to the increase in developer demand and the development of DeFi, the potential of ETH greatly exceeds that of BTC. In 2021, ETH will become the main asset of investors.
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The battle between applied value and stored value
Whether it is this report or Jiang Zhuoer's point of view, the industry increasingly regards BTC as a value storage tool, while ETH has more value reflected in the network application level in addition to some value storage attributes. So behind the discussion of whether the market value of ETH can surpass BTC is actually a contest between the application value and stored value of encrypted assets.
Bitcoin's "digital gold" consensus is getting stronger. Under the epidemic that lasted from last year to the present, the United States implemented the policy of monetary quantitative easing, and the advantages of Bitcoin value storage and anti-inflation have been favored by some traditional enterprises and financial institutions.
In terms of value storage, Ethereum, as an encrypted asset represented by Blockchain 2.0, cannot yet compare with Bitcoin in terms of influence. However, in terms of building blockchain applications, the advantages of ETH are brought into full play.
In 2020, the fee consumption of the ETH blockchain network surpassed that of BTC for the first time. Last year, users spent nearly $600 million in fees on Ethereum network transactions, 83% more than BTC. "This shows an interesting trend in the evolution of competition between different chains." Encrypted asset analyst LIESL EICHHOLZ believes that this change can be explained in many ways. On the one hand, it shows that ETH is more valuable than BTC, and it may subvert BTC in the future. However, some people believe that this is a sign of underdeveloped ETH infrastructure, "in terms of transaction costs, ETH cannot compete with BTC."
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In 2020, Ethereum network transaction fees surpassed BTC for the first time
At present, the low efficiency of the Ethereum network and the high transfer fees are still the key factors hindering the further development of the market value of ETH. However, due to the launch of the 2.0 network and the implementation of the Rollup expansion plan, the market has provided a strong expectation for ETH and the motivation for investors to inject capital.
LIESL EICHHOLZ believes that with the arrival of ETH 2.0, BTC will consume more network transaction fees than ETH again. However, if ETH continues to capture more value in terms of overall usage, its valuation may continue to move closer to BTC.
Some DeFi application developers pointed out that the performance of Ethereum must be greatly improved. It is best that a large number of applications do not need to run on the main network in the future, so as to avoid directly paying Gas fees. With the support of applications, the market value of ETH is expected to exceed that of BTC. According to the roadmap of ETH, this time point will most likely be 4 years later.
At present, although there is still a large gap in the market value of ETH compared with BTC, some on-chain data show that ETH is catching up at an accelerated pace.
