In the long term, bitcoin’s leadership may be challenged by its main competitor, etherium. Back in April of this year, the market capitalization of the first cryptocurrency was above $1 trillion, while the total value of ETH tokens was $244 billion. In mid-July, three months later, after a significant correction of digital assets, BTC lost about 40% of its price, the market capitalization indicator decreased to $639 billion. At the same time, the share of etherium increased and reached $248.9 billion, even though the negative background from China was reflected in its rate.
Flexibility and adaptation as factors of long-term success
The main prerequisite for the stability of capitalization of the second most popular crypto-asset is its development as an ecosystem. For now, Bitcoin continues to be on the laurels of the first-born and gets its dividends from it. Nevertheless, BTC, unfortunately, stopped at the stage of transactional system, while ether receives support from investors because of its developed infrastructure and flexibility.
Now ETH is both decentralized finance and the ability to raise funding, as well as blockchain solutions and much more. The project’s flexibility is also expressed in its desire to adapt to new challenges. For example, the boom in the DeFi segment has led to an increase in costs in the platform’s network, and an update is scheduled to be launched in August that aims to reduce commissions within the ecosystem.
Thus, Etherium is of interest to market participants not only as an investment-attractive digital asset, but also as an emerging project that demonstrates alternative digital asset opportunities.
Sustainability and continuous development
Bitcoin has faced the fact that it has never been able to turn around the idea of a cryptocurrency, stalling solely on the payment service. On the horizon of the next two or three years, if there are no drastic changes, it is likely that ETH could take the leading position in the market.
Indirect preconditions for this already exist, first, the more stable capitalization of ether compared to bitcoin. Second, the token’s growth rate in 2021 has significantly outpaced that of BTC. According to the CEX.IO exchange, ETH was at $2,109 on July 12, adding 186% to its year-opening price. The growth rate of the first cryptocurrency over the same time period is much more modest: from $28,951 the digital gold rose to $33,527, strengthening by only 15%.
And finally, thirdly, it is a decrease in the dependence of the Etherium network on mining. Bitcoin has suffered heavy losses because China has tightened policies towards miners, reducing network capacity, collapsing hash rates, and as a result pulling quotes down. Ethereum has protection against these kinds of challenges, so in terms of the evolution of digital assets, today it has a great chance to lead, while bitcoin’s capabilities are gradually running out.