A look at the year-to-date performance for both Ether and Bitcoin reveals a surprising relationship between the two most popular cryptocurrencies in terms of market value. BAsed on a few key factors, we are witnessing Ethereum giving Bitcoin a run for its money.
Here are the key takeaways:
- BTC is currently trading at nearly 8% higher than it was in January 2020.
- ETH prices have risen by almost 43% since the beginning of the year.
- As investors rush to stock up on stablecoins pegged to the dollar, Ethereum and Bitcoin prices are likely to rise as a result.
- Major recent increases in stablecoins spell a changing landscape for the Ethereum network and Ether prices as a result.
- BTC often responds positively to the ‘printing’ of new stablecoins like Tether (USDT).
The deepening effects of a global pandemic and the increasing need for investors to regain control is leading markets around the world in various directions. For the stock exchange and bond markets, the story is not as inspiring as many would hope. Forex is looking to be on equally shaky ground with global stock markets and many commodities - such as oil - have plunged in value. The result is more investors looking to secure cash, and one effortless way to do that is to buy into the stablecoin network.
Surge in Stablecoins
Stablecoins are pegged to certain assets. Some are pegged to other cryptocurrencies, while others are pegged to fiat currency. One of the most popular stablecoins available today is Tether, also known as USDT, and it is used in great volumes as a tool to buy and sell other crypto assets of the world’s cryptocurrency exchanges.
Tether has seen an increase in market value exceeding $3 billion just this last month. The total value of USDT across exchanges went from $6 billion to $9 billion. That fact is an indication in itself that demand has sharply risen based on recent events and, indeed, speculation that future value of tokens built on the Ethereum network, as well as Ether itself, is due to sharply rise in the near to mid-future.
Will more stablecoins to lead to greater value?
The answer to the question as to whether more stablecoins will lead to greater value for Ether and Bitcoin is most likely, yes. At least that is what many crypt analysts have suggested.
To start with, Ether (ETH) is used on the Ethereum blockchain to pay for all the fees associated with transactions on the network. Each time a coin or token based on Ethereum is bought, sold, or transacted in any other way, there is a fee for the transaction. The common term for the fee is ‘gas’, and as the gas prices go up in both quantity and frequency there is more demand for the base cryptocurrency, ETH.
What does that mean for the future of prices of Ether? It may still be too early to say for sure, but there are many signs that point to an extreme jump in price as stablecoins like Tether gain more ground.
As for how more stablecoins flooding the crypto market will affect the price of Bitcoin, it is quite likely that we will see increases in BTC prices as more investors use their stablecoins to trade with Bitcoin. Essentially, tokens like USDT make it much easier for investors of various skill and experience levels to utilize and take advantage of crypto exchanges, which also means more people pumping money into Bitcoin.
More on Bitcoin
While Ethereum is certainly looking stronger than BTC on the monthly charts, it also looks more volatile, with both more drastic gains and losses. Still, both have largely followed a similar pattern, spiking and dipping at nearly the same times, which is a sign that the two most popular cryptocurrency options available to today in terms of market value often feed off of each other.
Bitcoin certainly has the power to pull Ether along its trajectory, and as we have recently seen, Ether has the same potential effects on Bitcoin. Bitcoin and Ether occupy different corners of the crypto space, but both are also essential to the other’s existence and validity in many ways.
At the moment, BTC is trading at nearly 10% above it’s price at the start of the year, and the coin has nearly recovered from the March 12th price dive that threw the entire crypto market for a spin. That means, for all the dramatic volatility that we have witnessed for Bitcoin over the past four months, crypto markets have been successful in righting themselves quite impressively. And, many would argue, Bitcoin and Altcoins seem poised for some big gains moving forward.
Other Factors Driving Bitcoin Prices Up
Bitcoin has been on a fairly steady uptrend since the middle of last month, albeit with some serious ups and downs shaking out investors. The increase in Tether is very likely a factor that gives Bitcoin price some strength, but there are also other factors to take into consideration.
The incoming halving event scheduled for less than fifteen days from press time, has led many investors to take their bitcoins off exchanges. When investor remove their coins from the exchanges, it usually means that there is a strong belief that the value is going to go up over the course of several weeks or months. As digital wallets that are designed to hold digital assets securely are considered to be much safer options for holding crypto, that is where much of the crypto wealth goes in times of waiting.
Some are expecting an anti-climactic result from this year’s halving event, but there are far more analysts pointing to the effects of Bitcoin’s prices after the last halving events. Following both of Bitcoin’s previous halving events, impressive bull runs ensued.
Year-to-date, Ethereum has made much higher gains than Bitcoin and is currently sitting in a much nicer spot than the world’s biggest crypto is. There is plenty of reason to believe that Ethereum and the stablecoins based on its network are making waves large enough to not only prop up Bitcoin prices but to also support it on a fundamental level. The two cryptocurrencies seem to be playing off each other's strengths and weaknesses, and they are doing so in a way that sees them both moving forward. It is highly likely that Ether and Ethereum-based tokens, as well as Bitcoin, will see increased valuation in the coming months. Stay tuned for more.