Ethereum is back and nibbles on Bitcoin’s heels

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Ethereum, or ether for short, is also trading at record highs. It is now hovering around $ 4,850, having climbed more than 560% this year, compared to the “mere” 135% pop for bitcoin. Crypto investors are betting the Ether will continue to be used as the backbone for even more non-fungible tokens, or NFTs, as well as so-called smart contracts.

Experts predict that this wave of decentralized finance (DeFi) will become more prevalent in the banking sector. This could be great news for Ether, as well as solana, another crypto that uses blockchain technology in DeFi applications.

Ether, which now has a total value of around $ 575 billion for all of its coins in circulation, also narrowed the market capitalization gap with bitcoin, which is worth around $ 1.3 trillion. The two cryptos now represent nearly two-thirds of the nearly $ 3 trillion cryptocurrency market.

“We are seeing a shift in the industry where bitcoin has gone from 75% of the overall cryptocurrency market cap to around 50%,” said Michael Pinsker, founder and chairman of the wealth management technology company Docupace, on the declining bitcoin market share. since 2017. “This percentage is expected to decline further.”

More investors flock to the ether

Ether has also become more popular with many traders on the Coinbase crypto brokerage.

In its latest earnings report after the closing bell on Tuesday, Coinbase said 22% of its third-quarter trading volume was in ether, compared to 19% for bitcoin. This is the second quarter in a row that ether trading has been higher than bitcoin.

There could even be a so-called “turnaround” over the next decade, where the value of ethereum will eventually overtake bitcoin, said Jared Madfes, partner of Tribe Capital.

The persistence of inflation is also benefiting ether and other cryptocurrencies. Consumer prices continue to rise and investors are acknowledging that digital currencies are appreciating in value at a time when interest rates remain low and the Fed and other central banks are pumping money into the market. economy.

“Inflation is not going to go away. Central banks that print money are a chasm that cannot be crossed,” said Dylan LeClair, head of market research at Bitcoin Magazine.

The rise of bitcoin ETFs could also be good news for Ethereum, as experts predict similar ether ETFs could be launched soon. This will make it even easier for average investors and large money management companies to buy crypto.

“Institutions want more exposure to cryptocurrencies, so I predict there will be ether ETFs,” Tribe Capital’s Madfes said.

Experts say stick with ether and bitcoin and avoid meme coins

Nonetheless, investors should be careful when buying cryptocurrencies. Not all of them have practical uses.

There are now many so-called meme coins, such as dogecoin and shiba inu, which have gone up in price thanks to the social media hype (including from Tesla CEO (TSLA) Elon Musk) and other sillier reasons. kinda like the 1990s and the internet, ”said Eric Satz, CEO and founder of Alto, an investment firm that offers a crypto IRA. It refers to the many ecommerce companies that went public and soared at the time. But only one real leader, Amazon (AMZN), is still standing today.

“There are a lot of crypto assets. But there will be a lot of casualties down the road. Investors should exercise caution,” Satz said, adding that he recommends that investors have a cryptocurrency wallet made up mostly of bitcoin, ether and solane.

Ray Youssef, co-founder and CEO of Paxful, a crypto trading platform, takes an even more cautious approach. Crypto investors should not hold dogecoin, shiba inu, or any other more speculative crypto, he said, as big corrections are ahead.

It’s like the stock market in that regard: it’s one thing to own stocks of Apple (AAPL), Microsoft (MSFT), or some other top company in the S&P 500. Stocks themselves are a. another story.

“Ether and bitcoin versus same coins are like the difference between blue chips and penny stocks that you get a call from a guy in a boiler room,” Youssef said.

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