2021-02-08

Joel Egbejule

Joel E.

The massive boom in cryptocurrency has seen the total market cap of all cryptocurrencies rise above the $1 trillion in 2021. Bitcoin and Ethereum represent half of the total market cap with $696,532,174,239 and $189,263,466,596 respectively.

This increase in market cap has resulted in a surge in Bitcoin and Ethereum prices in today's market. Crypto traders aren't surprised by this price increase, though, because an increase in the market cap of an asset divided by the total supply of that asset will result in the price increase of that asset.

This year has seen bitcoin hit an all-time high of $41,973, climbing 40%. Ethereum has also made great strides in 2021 with a current all-time high of $1,760.49 which it reached on Friday, 5th of February.

Both cryptocurrency assets have done really well so far this year. This has brought forward once again a frequent comparison between both cryptos to determine which assets will perform better in 2021.

 In this post, we will be explaining in detail why Ethereum may outperform Bitcoin in 2021.

Ethereum cryptocurrency in 2021

What is Ethereum?

Ethereum is an open-source, decentralised computing platform that runs on thousands of computers around the world simultaneously. Its decentralised structure makes it not subject to any governmental control, central body, or authority. 

Ethereum also allows developers to create and deploy their code and smart contract as well as decentralised applications (Dapps) on its network. Ethereum has shown over time that the blockchain network is more than just sending and receiving digital assets.

Reasons for the Ethereum Traction

The Boom in Decentralised Finance

Decentralised Finance (DeFi) is a system around financial applications that are deployed on the blockchain network. According to CoinMarketCap, the total market cap for DeFi tokens is $52.90 billion.

DeFi promotes the use of the blockchain network to provide financial services. These financial services are not subject to any central body or government entity. 

The three major use cases of DeFi are (a) creating banking services, (b) providing peer-to-peer or pool lending services, and (c) aiding decentralised lending platforms.

As the value of protocols, decentralised applications, and smart contracts that make up the DeFi system increase, it consequently affects the value of Ethereum. One of such DeFi projects is Uniswap (UNI).

The Rise in Uniswap

Uniswap comes with an exciting innovation that runs on the Ethereum network that allows ERC-20 token swapped. ERC-20 tokens are basically tokens that are created and hosted on the Ethereum network. Uniswap allows traders to swap these different tokens for another and also provide liquidity in a staking pool while they earn fees in return.

The total market cap of Uniswap token (UNI) is $5,885,062,269. Uniswap has brought significant development and innovation to the Ethereum network. Also, the growth of Uniswap and other similar DeFi projects on the Ethereum network also means growth for Ether as its market cap also increases.

Grayscale Investment Trust Funds

The news of Grayscale investment adding an Ethereum Trust is also big news for Ethereum. It opens up Ethereum for institutional investors. Grayscale’s latest acquisition of $38,000,000 worth of Ethers has also contributed to the current bull run of ETH.

Eth 2.0 Staking

The introduction of validators in Eth 2.0 meant that at least 16,384 validators with a minimum of 32ETH were deposited when Phase 0 went live. Currently, the amount of ETH staked in Eth2.0 is over $1billion.

In conclusion...

While the adoption of Bitcoin has increased around the world and it has attracted multiple institutional investments, Ethereum is looking more promising this year as the network scales and keeps expanding its reach in the world of DeFi.

Both cryptocurrencies, however, are on a trend to reach new heights this year and many investors are buying Bitcoin and Ethers to hodl as they await the inevitable.