Rebound stronger than BTC What other stories does Ether have to tell?

While Bitcoin is being criticized for mining energy consumption, the transition to PoS is not unwise for ETH.

It has been a week since ‘Black Thursday’ and the fear in the crypto asset market has eased.

Since May 24, mainstream assets such as BTC and ETH have started to rebound, with BTC rising from $31,083 to a maximum of $40,855, up 31.4%, while ETH has been in the spotlight, rising from a low of $1,728 to a maximum of $2,909, up 68.34%.

According to Aicoin’s data, the ETH/BTC trading pair opened at 0.031 BTC on April 1, and on May 15, the ETH price rose to 0.082 BTC, a month and a half later, ETH rose 164.5% compared to BTC. 164.5% in one and a half months.

The market trend also reflects the strength of ETH, so what else is potentially expected from it?

At a time when Bitcoin mining is currently being regulated out of China due to energy consumption, ETH, which is transitioning to PoS, becomes an alternative way out for crypto assets. According to the plan, when ETH 2.0 lands, the performance of the whole network will be significantly improved and the ecological development speed may go up another level.

Market Rebound Phase ETH to BTC Exchange Rate Rises 30%
After experiencing the “5-19” plunge, the crypto asset market has entered a shock consolidation phase.

Looking at the market trend, mainstream assets such as BTC and ETH bottomed out on May 23 and then came out of a short-term rebound trend. Since the 24th, BTC rose from a low of $31,083 for several days, touching a high of $40,855, with a maximum gain of 31.4%. 27th at 2pm, BTC was quoted at $38,132, still up 22.6% from the low.

Compared to BTC, ETH performed more strongly in the rally phase. It rose from a low of $1728 to $2909, with a maximum gain of 68.34%. Currently, ETH is floating around $2720, up 57.4% from its low.

From the data, it can be seen that in this round of bottoming out rebound market, ETH is more than twice as much as BTC, and the rebound momentum is more rapid. Of course, the factor that cannot be ignored is that during the plunge, ETH fell more than BTC, calculated at the opening price on May 19, BTC opened at $42,974 that day and fell as low as $29,000, with a maximum drop of 32.5%; while ETH opened at $3345 and fell as low as $1728, with a maximum drop of 48.34%.

It is easy to see that BTC is more “resistant” than ETH during the plunge, while ETH has greater pull-up potential during the rise.

According to Aicoin’s data, the ETH/BTC pair opened at 0.031 BTC on April 1, meaning that one ETH was equivalent to 0.031 BTC. 0.082 BTC, a month and a half, up 164.5%.

Rebound stronger than BTC What other stories does Ether have to tell?

ETH/BTC price has continued to rise since April

However, during the market decline phase from May 15 to 23, the ETH/BTC price fell back to as low as 0.055 BTC. while during the rebound phase, ETH/BTC pulled up quickly again and is currently quoted at 0.072 BTC, which means that during the market rebound period, the ETH to BTC exchange rate rose by 30%.

If the time cycle is stretched out again, according to the data of May 27th non-small, ETH rose 1245.90% in nearly a year, and BTC rose only 334.04% in the same period.

The performance of ETH appears brighter than BTC in this bull market cycle. Jiang Zhuoer, the founder of Lepit Mining Pool, predicts that the total market value of ETH will briefly exceed that of BTC in this bull market, and the highest price may reach $20,000. In the next cycle, the total market cap of ETH will permanently exceed the total market cap of BTC. The reason he gave was that ETH is equivalent to the Internet, and the various projects on it are like one tech company, BTC can be compared to gold, while the total market cap of the Internet is higher than gold.

However, after the market’s waterfall decline, most investors’ confidence was dented and people were not sure if the bull market was over. Today the price of ETH looks out of reach from Jiang Zhuoer’s prediction of $20,000, and its current market cap is $317.466 billion, less than half of BTC’s total market cap of $716.042 billion.

So why is the market still bullish on ETH and what are the potential expectations for it?

London’s “escalating” deflationary proposals support rising expectations
Although ETH price and its on-chain ecosystem have been hit hard in this round of plunge, DeFi’s explosive growth after more than a year still makes ETH much stronger compared to the last bull market.

According to Eurotech Cloudchain, the current total locked-in value of ETH on-chain is $76.4 billion, down from the pre-crash high of $110.8 billion, but a year ago, that figure was only $1.04 billion. With the growing size of the DeFi market, the ETH ecosystem has grown considerably, and the total lockup value has doubled 73.46 times in one year.

The current total locked position value on the ETH chain is $76.4 billion

DeFi has returned ETH as a blockchain network to its original value, and as one of the “shovels” for on-chain fees, collateral in lending agreements, and liquidity mining, the price of ETH has gone up with DeFi. From this point of view, it does not seem abrupt for ETH to move stronger than BTC.

In addition, the most talked about issue is ETH’s upcoming London upgrade in July. The London upgrade is a planned hard fork upgrade for Ether, and it is highly anticipated because the long-discussed EIP-1559 proposal may be officially implemented in this upgrade.

The EIP-1559 proposal was proposed by Ether founder Vitalik in 2018, and its main goals include avoiding economic abstraction, flexible block design, permanent block subsidies, and establishing an algorithmic fee model. In short, the proposal aims to improve block ‘resilience’, which is used to slow down network congestion; and to reduce Gas fees by replacing the current bid-first packing model with an algorithmic fee model.

In the algorithmic fee model, EIP-1559-compliant wallets will automatically set a transfer fee. This fee consists of a base fee and a tip fee, where the base fee is destroyed and the tip fee will be used as a reward for miners.

In April this year, EthHub co-founder Anthony Sassano clarified the meaning of ‘destruction’ in it again, saying that once EIP-1559 is implemented, every transaction on Ether will burn ETH. every clearing, every ETH transfer, every layer 2 proof, every DEX transaction, even every rug pull, no matter transaction or whatever, ETH will be burned. This means that ETH will enter an era of relative deflation, reducing the inflation rate under the overall mechanism of unlimited supply.

Some investors calculate that 2.2 million ETH will be destroyed annually after the implementation of Ether EIP-1559, which will reduce the inflation rate of ETH from 4.2% to 2.3%, which is approximately equal to halving. Arthur Hayes, former CEO of BitMEX, believes that the EIP-1559 upgrade packaged with the upcoming London hard fork will tighten the supply of ETH, which is the current main reason for the bull market.

Previously, it was made clear in the Ethercore developer meeting that the London upgrade on July 14 will implement EIP-1559. the proposal has now begun test deployments in the test network.

In addition to expectations from deflation, Ether investors are also closely watching the ETH 2.0 upgrade, which is an important step for ETH to move from PoW consensus to PoS. At a time when crypto asset mining is being suppressed by Chinese regulatory policies, PoS seems to be the smarter choice. According to the plan, ETH 2.0 will land, the performance of the whole network will be greatly improved, and the speed of ETH ecological development will be greatly accelerated at that time.

And according to the data of Eurotech Cloud Chain, the current ETH 2.0 deposit contract address has received more than 5.1 million ETH pledges, while the current circulation of ETH is about 115 million pieces, which means more than 4% of ETH is in a locked position.

Overall, the continuous development of the ETH on-chain ecosystem, as well as its upgraded performance and deflationary expectations, has made investors expect more from it. Compared to BTC, ETH seems to have more of a story to tell, and this is reflected in the market trend. However, it should be noted that, for now, it is still unable to escape the market-driven effect of BTC, and the price market is therefore at risk.

Posted by:CoinYuppie,Reprinted with attribution to:
Coinyuppie is an open information publishing platform, all information provided is not related to the views and positions of coinyuppie, and does not constitute any investment and financial advice. Users are expected to carefully screen and prevent risks.

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