Bitcoin has rocketed to an incredible all-time high of nearly $70,000. But it seems as though investors have become even more excited about Ethereum, which is now the world’s second-most valuable cryptocurrency.
Ethereum, or Ether for short, is also trading at record levels. It is now soaring around $4,850. It surged more than 560% this year, compared to the “mere” 135% pop for Bitcoin.
Crypto investors are gambling that Ether will continue to be used as the fortitude for even more non-fungible tokens, or NFTs, as well as so-called smart contracts.
Experts foresee that this wave of decentralized finance (DeFi) will become more dominant in banking. That could be great news for Ether, as well as Solana. It is another type of crypto currency that has blockchain technology used in DeFi applications.
Ether now has a total value of about $575 billion for all its coins in circulation. It has also narrowed the market cap gap with Bitcoin, which is worth about $1.3 trillion. The two cryptos now make up two-thirds of the $3 trillion cryptocurrency market.
Founder and president of wealth management tech firm Docupace, Michael Pinsker, stated that they see a shift in the industry where Bitcoin went from being 75 percent of the overall cryptocurrency market cap to about 50 percent.” Pinsker also reported that there has been a drop in Bitcoin’s market share since 2017. He also voiced “that the percentage should come down even further.”
In its latest earnings report after the closing bell on Tuesday, Coinbase said that 22% of its third-quarter trading volume was for Ether. This is compared to 19% for bitcoin. That is the second straight quarter that Ether trading was higher than bitcoin.
There could even be a so-called “flippening” in the next decade. This is where the value of Ethereum storms up to top Bitcoin, said Jared Madfes, a partner with Tribe Capital.
The persistence of inflation is benefiting Ether and other cryptocurrencies, too. Consumer prices continue to surge. Also, investors recognize that digital currencies are gaining more concrete value at a time when interest rates remain low and the Fed and other central banks pump money into the economy.
Dylan LeClair, head of market research at Bitcoin Magazine, said that “inflation is not going away. “Central banks printing money is a gorge that can’t be crossed.
The rise of Bitcoin ETFs could also be good news for Ethereum. Because experts predict that similar Ethereum ETFs could soon launch. As a result, average investors and well-known management firms will find it easier to enter the crypto market.
Tribe Capital’s Madfes, a venture capital firm, said, “Institutions want more exposure to cryptocurrencies, so we anticipate there will be ether ETFs.”
Experts: Avoid Memecoins, Stay with Ether and Bitcoin
Still, investors need to be careful when buying cryptocurrencies. Not all of them have rational uses.
There are now many so-called meme coins out there, such as Dogecoin and Shiba Inu.
“Crypto is a lot like the 1990s and the internet,” said Eric Satz, CEO and founder of Alto, an investment firm that offers a crypto IRA.
He says the above in reference to the many e-commerce companies that went public and soared back. But only one true leader, Amazon (AMZN), is still standing tall today.
There are a whole lot of crypto assets out there. But there will be a lot of roadkill. Investors need to proceed with caution, “Satz said, adding that its investors have a crypto portfolio that’s made up mostly of Bitcoin, ether, and Solana.
Ray Youssef, co-founder and CEO of Paxful, a crypto trading platform, has an even more cautious take. He said that crypto investors should not hold onto Dogecoin, Shiba Inu, or any of the other more speculative cryptos, because big corrections lie ahead.
It’s like the stock market in that respect: It’s one thing to own shares of Apple (AAPL), Microsoft (MSFT) or another top company in the S&P 500. Meme stocks are another story.
“Ether and bitcoin versus meme coins are like the difference between blue chips and penny stocks.”