First Mover: Bitcoin Shows Signs of Life But Ether (And Crew) Steal the Limelight – CoinDesk – CoinDesk

In the race to become the dominant cryptocurrency platform, Ethereum is gaining on Bitcoin.

Take a look at the market capitalization of ether, the native token of the Ethereum blockchain. Currently, the value stands at about $26 billion. But that figure doesnt include all of the digital assets built atop the Ethereum blockchain, including some of this years hottest tokens:stablecoinslike tether and USDC and altcoins likeCrypto.coms CRO, Chainlinks LINK, CompoundsCOMPand KybersKNC.

Youre readingFirst Mover, CoinDesks daily markets newsletter. Assembled by the CoinDesk Markets Team, First Mover starts your day with the most up-to-date sentiment around crypto markets, which of course never close, putting in context every wild swing in bitcoin and more. We follow the money so you dont have to. You cansubscribe here.

The combined value of those ERC-20-standard tokens is alsoaround $26 billion, according to the data provider Messari. That puts the market capitalization of the Ethereum ecosystem at more than $50 billion closer to bitcoins $170 billion than if ether were considered alone.

The comparison shows how the rapid pace of development this year on Ethereum has brought the blockchains ecosystem closer to challenging Bitcoin. The value gap narrowed overthe past month as bitcoins price stagnated,while demand for stablecoins and a flurry of activity in decentralized finance, known as DeFi, has ignited the value of Ethereum and the tokens that depend on it.

DeFi tokens continue their bull run, cryptocurrency analysis firm TradeBlock wrote Monday in aweekly commentary.

Messari, a digital-asset data firm, said in a report thatthe Ethereum blockchains daily settlement value recently surged to about $2.5 billion, surpassing Bitcoins for the first time since at least early 2019.

Ethereum has blown past Bitcoin, Ryan Watkins, a Messari analyst, wrote in the post on Monday. With the increasing amount of economic activity taking place on Ethereum, this trend is unlikely to reverse anytime soon, if ever.

Its the latest chapter in the competition among projects to attain critical mass in the cryptocurrency industry. For entrepreneurs and investors in the space, the goal is to establish networks and projects with enough name recognition, credibility and functionality to scale quickly if and when mass adoption comes.Bitcoin, the oldest and largest cryptocurrency, attracted most of the hype early in 2020 as some analysts predicted a once-every-four-years event known as the blockchains halving could send prices to $90,000. Bitcoin got another bluster of endorsements as the spreading coronavirus slammed the global economy, sending traditional markets plunging and prompting the Federal Reserve and other big central banks to createtrillions of dollars of freshmoney.

Many investors predicted that the money injections would debase the dollars purchasing power, driving up theprice of bitcoin. Yet over the past couple months, bitcoins price has stagnated below $10,000, and even its notoriousvolatility has withered prompting fickle crypto traders to seek faster-moving action.

Bitcoin has been stuck in a tight trading range for weeks, boring for a market that used to be known for itsthrills. However, there are signs Tuesday that an expected big move may be building.

Still, Ethers price is up 81% in 2020 to $237, almost three times bitcoins 30% year-to-date gain.

Steve Ehrlich, CEO of publicly traded cryptocurrency brokerage firm Voyager Digital, says bitcoin has accounted for about 15%oftrading volumes so far in July, down from about 60% prior to the May halving.

Weve seen a tremendous change in our retail customerbehaviors, Ehrlich said Monday in a phone interview. Whenbitcoin is extremely flat in the marketplace, people are looking at other tokens.

In terms of name recognition and popularity outside of the crypto industry, Bitcoin still dominates. According to a report last week from the trading platform eToro and data provider The TIE, only four stories about DeFiappeared in June in non-crypto news sources, versus some 200 about bitcoin.

There is a growing realization though that the 2020 DeFi hype may be overdone, Mati Greenspan, founder of the cryptocurrency and foreign-exchange analysis firmQuantum Economics, wrote Monday in an e-mail to subscribers.

Denis Vinokourov, head of research at the London-based cryptocurrency prime brokerBequant, said that ethereum risks becoming a victim of its own success, activity inthe tokens built atop the blockchain are driving up transaction fees.

This resurgence in the network performance has come with a raft of undesired consequences, Vinokourov wrote in emailed remarks.

And Jimmy Song, a well-known bitcoin developer and promoter, told the website CoinMarketCap in aninterview published last weekthat he thinks many DeFi projects will fail to live up to their decentralized billing because they almost always have to have some sort of back doorin case something goes wrong.

Its really just a form of gambling with limited upside for people that arent in control of the protocol, Song said.

For now, though, the Ethereum ecosystem is edging closer.

Jack Tan, of Taiwan-based quantitative firm Kronos Research, told CoinDesks Daniel Cawrey that he seesether hitting $500 by the end of this year. That would more than double ethers market capitalization, to say nothing of any potential increases in the value of ERC-20 tokens.

Ethereum the platform has done its job, the cryptocurrency investment firm Arca wrote Monday in a weeklyblog post.

Traders are apparently doing their jobs too following the action.

Tweet of the day

Bitcoin watch

BTC: Price: $9,347 (BPI) | 24-Hr High: $9,363 | 24-Hr Low: $9,152

Trend:Bitcoin is showing signs of life on Tuesday with prices trading above $9,340 at press time, representing a 1.9% gain on the day. Notably, the cryptocurrency hasnt witnessed an over 1% move since July 9.

The 4-hour chart shows the cryptocurrency has broken higher from the four-week-long narrowing price range. The breakout is backed by an above-50 or bullish reading on the relative strength index. Meanwhile, the MACD histogram is printing higher bars above the zero line, a sign the upward move may gather pace.

The immediate resistance at $9,480 a lower high created on July 9 could be put to test over the next few hours.

Acceptance above that level would confirm a Bollinger band (volatility indicator) breakout on the daily chart and may yield a rally to $10,000.

The bias would turn bearish if the cryptocurrency finds acceptance under $9,000. However, sellers have failed multiple times in the last two months to establish a foothold below that psychological support.

The leader in blockchain news, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups.

Read the original post:
First Mover: Bitcoin Shows Signs of Life But Ether (And Crew) Steal the Limelight - CoinDesk - CoinDesk