Ethereum is reputed to be the second-largest cryptocurrency in terms of market cap. It is also among the best performing coins in the recent bull market, reaching an all-time high of $4379.53 in May 2021. Also, its market cap has risen to over 30% of Bitcoin’s recently and this has prompted many crypto investors to shift from Bitcoin to Ethereum, Web 3.0 apps, and DeFi (decentralized finance).
According to Yahoo Finance, Megan Kaspar, a crypto investor and co-founder of Magnetic, a cryptocurrency investment company predicted that Ethereum will cross the $3,500 level in 2021. This forecast came through in less than 5 months, but Kaspar told the finance website that Ethereum has the potential to reach $10,000 before the end of 2021.
The Ether network is moving to beat that of Bitcoin by changing its transaction confirmation method to one that is less energy-consuming. Currently, Bitcoin utilises the proof of work method that rewards miners who compete against each other using energy and computers to document and confirm transactions on the blockchain.
It is expected that Ethereum will attract more institutional attention after the implementation of the network changes, giving it a higher chance of going toe-to-toe with Bitcoin.
Numerous other factors have been working in favour of Ethereum as against Bitcoin. For instance, the Bitcoin network was developed to perform just one task, which is to help people send money anonymously without using traditional banking methods. However, the idea behind the Ether network is much bigger. To this effect, it can be used for numerous things, rather than serving as a means of transaction or store of value.
For instance, while Ethereum serves as a digital currency, that’s not its basic purpose. The ether blockchain was primarily developed to monetise the operations of dApps and Ethereum smart contracts. The platform also allows developers to create use cases for Ethereum beyond its main function.
Furthermore, Bitcoin’s market cap in January 2020 was about $150 billion while Ethereum was at $16 billion, which was almost one-tenth of Bitcoin’s size. Fast forward to May 2021, the market cap of Bitcoin is about $1 trillion but Ethereum is closing the gap at $400 billion, meaning that it is now more than a third of Bitcoin’s size.
This implies that Ethereum is seeing faster growth than Bitcoin, which will, in turn, affect price positively. Investors who overlooked Ethereum before are buying into the project now, having seen the statistics that the coin is pulling.
With Ethereum’s flexibility, network model change, and impressive market cap increase, we will most likely see it hitting the $10,000 mark in the near future. As the coin continues to receive positive predictions, the question on every investor’s mind is, “Would it be a wise choice to invest in Ethereum?” The present market conditions show that investing in Ethereum could be a good move; however, investors should ensure they apply proper risk management techniques.
