Ethereum and bitcoin have maintained their reputation as the largest tokens in the crypto market. While bitcoin’s growth can be attributed to its pioneering status and its adoption as a legal tender in different parts of the world, Ethereum’s growth has been due to its many features, which have endeared the hearts of many in the crypto space to it. Both tokens also made the headline of many crypto news in the just-concluded year. bitcoin increased to hit the $1 trillion valuations twice, with Tesla accepting the token as a means of payment before pulling the plug. China did the worst damage by banning crypto mining in the country.
The year ended with the first bitcoin ETF being approved by the Securities and Exchange Commission. Although we did not get to see bitcoin at $100,000, the year was an eventful one for the cryptocurrency market leader. Ethereum, on the other hand, has been bitcoin’s sidekick for most of its existence. Yes, it does not have the public appeal bitcoin has, but it has carved a niche for itself with its pioneering status in a number of fields, ranging from DeFi to NFTs.
Although its protocol is hosting the bulk of metaverse, there still exists a lot of work if it would not be the victim of its own success seeing the scalability issues surrounding it. Ethereum’s growth has been unbelievable, and to keep this momentum going, its founders have announced an ETH 2.0 project
The new ethereum protocol will retain the perks of the former one, but it would be on a proof-of-stake; hence it will be faster, cheaper, and more environmentally friendly. The ETH 2.0 filled most news from the past year, and staking activities were enabled to allow users to earn passively while keeping the integrity of the network. The eth block explorer shows us that there are over 270,000 validators, more than 8.9 million staked Ethereum, and currently over 90,000 Epochs.
We talked about bitcoin and Ethereum in this article because up until recently, both tokens have been highly correlated. This means one could predict the position of one from seeing the price increase or decrease of the other. Let’s see more about that.
Ethereum has been called an independent asset for quite some time, and this has been because the token has been the subject of some large traction in recent years. The bitcoin-Ethereum correlation has been diverging since the beginning of October, when it dipped by as low as 60%. This figure represented the lowest correlation between both tokens since they were first launched. Checking the correlation between both tokens with their year-to-date price, bitcoin doubled from its January price, while Ethereum increased by over five times its January price.
The trend was repeated again despite the crypto market dip that has liquidated almost a trillion worth of investment, but this time, the ETH/BTC pair increased by 13% shortly after the token dropped to the $50,000 mark. A spokesperson from Binance explained that Ethereum has garnered enough market support such that it does not need bitcoin to dictate the direction of its next move or how far it would move in that direction. While this is unusual, seeing that the bitcoin-ethereum pairs gain strength majorly during a market rise, it does not indicate a full detachment of Ethereum from bitcoin.
It is still surprising ethereum is still called an altcoin, a name given to every token bar bitcoin. The token has brought different features to the blockchain trading, as it has ushered in the decentralized finance space. GameFi, NFTs, and metaverse are a few of the perks built on the ETH network.
Binance’s representative concluded his interview by saying that ETH still has a long way from being detached from the grips of bitcoin. Still, it is no longer a matter of If, but rather how long it would take before it becomes fully independent. Ethereum will be the first to decouple fully, but several other tokens can follow suit in coming years. This would make tokens more like stocks, each independently unique and driven by either or both systematic and unsystematic risks.
There will still be a number of overlaps between bitcoin and Ethereum, but Ethereum is building an ecosystem too big to be ignored. bitcoin will still maintain its reputation as a market leader, while Ethereum’s demographics will make it a stand-alone token with more than enough pulling power itself.
The northbound movement of ETH is further proof that Ethereum could upend bitcoin in a not-so-distant future. Currently, Ethereum has surpassed bitcoin in its number of daily usage, and it recovers from a market downturn faster than bitcoin. All these are happening with the current buggy Ethereum network. How much more when Ethereum 2.0 comes into play. The new Ethereum upgrade is predicted to perform 100,000 transactions per second, dwarfing the performances of the Ethereum Killers.
With its 0ver 3500 dapps, myriad of nft platforms, and role in building the decentralized finance market, Ethereum is undoubtedly heading to a $1 trillion valuation, sooner than many expect. It might not happen in 2022, but if the market returns to normalcy, nothing is stopping a $1 trillion ethereum market cap from showing forth in 2023. Before then, you can engage in the Ethereum staking on the ETH 2.0 with as low as 0.01 ETH on Redot’s staking pool. Click https://redot.com/eth2/ to begin.