Bitcoin Price – What’s Next For Ethereum After Bitcoin’s Bullish Race? | Zoom Fintech
Bitcoin’s price broke through resistance and was now trading above $ 40,000 yesterday and simultaneously Ethereum’s hash rate hit an ATH as well and does that mean for the world’s largest altcoin – Ethereum, its prolonged rise in prices will continue. However, a prolonged rise in prices can be a challenge as network fees are high, impacting the demand for Ethereum on spot trading, by retail traders. However, for Bitcoin, the high chain fees don’t have much of an impact as it is more of a settlement layer and payment networks rely on it.
Moving smart contracts to centralized upper layers defeats the very purpose of ETH and therefore it works for the Bitcoin network but not necessarily for Ethereum.
Ryan Selkis, the founder of Messari Crypto recently commented in a tweet, on the future of Ethereum and that altcoin might not reverse Bitcoin this cycle. Aside from the implementation of staking, there has been little development in ETH 2 and unless Layer 1 / Layer 2 solutions are announced and launched, there is not enough clarity on the Ethereum evaluation. While it can be valued based on transaction fees or market capitalization, a clearer valuation can be derived from launching Layer-1 or Layer-2 solutions. Therefore, just as Ryan suggests, it may not be entirely correct to think that Ethereum can reverse Bitcoin in the current market cycle.
The correlation between Bitcoin and Ethereum is not at the highest level, however, the prices of the two assets are rallying following similar narratives in the current market cycle. Initially, in October 2020, Bitcoin started exiting trading and a narrative of scarcity caused its price to rise. On similar lines, Ethereum’s scarcity coupled with staking has resulted in a drop in supply. Active offer fell to a 3-year low last week and another interesting prospect in Ethereum’s narrative comes from institutional investors like Grayscale.
A week before the price of Ethereum hit its ATH and started trading above the $ 1,600 level, Grayscale accumulated 104,990 ETH worth $ 180 million in ETHE. So the Bitcoin rally can have a positive impact on the Ethereum price rally, almost like the start of the alternate season, if the Bitcoin rally goes off the rails. However, Ethereum’s rising transaction fees may cause a price correction in the short term.
At the time of publication, Ethereum was trading at $ 1,635 with a market cap of $ 184.7 billion.