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Ethereum Overtakes Bitcoin And Defies Underperformance
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Ethereum Overtakes Bitcoin And Defies Underperformance

Ruby Layram
Ruby Layram
January 31st, 2023
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Ethereum has defied the broad underperformance in the cryptocurrency market and has rapidly increased in price. These recent price gains come after a surge of interest in smart contract platforms that are being rapidly co-opted by the current NFT boom.

The newfound investor interest has meant that the coin has overtaken competitor Bitcoin (BTC) which has dwindled for over a month after setting a new record high near $68,000 in October.

Ethereum is currently trading at around $4,400, making it the second-largest cryptocurrency by market capitalization. The coin has turned into something of a reserve currency of its own for crypto investors. That also might mean headwinds for the asset over the longer term, not to mention an opportunity for competing blockchains.

The Ether coin’s primary use is to provide resources for transactions across the Ethereum blockchain.

According to Aaron Lammer, DeFi specialist at Radkl, “As the price has gone up, it’s gotten very expensive to get any [transaction] space on a block on the Ethereum blockchain.”

Lammer went on to explain, “There’s still a huge number of people waiting to be on-ramped into DeFi and NFTs, we might see the price of Ether go even higher, and really only become available to people who are using it in a large-scale institutional way.”

Following on from what Lammer said, one consequence of high fees is that projects and users have a financial incentive to drop Ethereum for less expensive smart contract-enabled blockchain alternatives such as Solana, Avalanche and Terra. These chains all offer similar features and are an attractive alternative.

As a result of the blockchain rally, the tokens for these competing chains behind smaller digital coins like Terra, Avalanche and Solana have also surged over the last month.

Terra has doubled over the last week and is now the 12th largest cryptocurrency, surpassing Shiba Inu. Terra now has a market capitalization of $25 billion.

Similar to Ripple, the token’s creator, Terra Labs, is being investigated by the SEC to determine whether some of the world’s top cryptocurrencies are, in fact, securities. At least for the moment, Ethereum isn’t suffering from similar regulatory uncertainty.

However, Ethereum’s developer team has started a coin supply burn in its August upgrade, which will continue to exacerbate transaction costs — and potentially causing its value proposition to better fit large institutions who can afford to pay the fees.

If you want to invest in Ethereum, you might be interested in automated cryptocurrency trading robots such as Bitcoin Prime, Bitcoin Era and Bitcoin Code.

Contributors

Ruby Layram
Ruby is a writer for Bankless Times, covering the latest news on the cryptocurrency market and blockchain industry. Ruby has been a professional personal finance and investment writer for 2 years and is currently building her own portfolio of altcoins. She is currently studying Psychology at the University of Winchester, specialising in Statistical analysis.