Over the last half of 2020, institutional investors and big capital became increasingly interested in cryptocurrencies. But, all the attention of the whales, as well as all the attention of the public, was fixed on Bitcoin (BTC).
Currently, why this cryptocurrency should become the "first cryptocurrency" for each investor.
Taking a glance at the numbers: ETH's growth since its March 2020 low following the COVID-19-induced market crash has been 1,200%, while BTC has merely grown about 700%. ETH's growth since its March 2020 low following the COVID-19-induced market crash has been 1,200%, while BTC has merely grown about 700%.
Surely, as Bitcoin continued to hit record highs and even broke through $40,000, ETH's new all-time is seemingly not so impressive. Additionally, the market capitalization of ETH is five times less than that of BTC. But, something more important for an investor is nice numbers and records of an asset from a portfolio of high income?
It is really convinced that Ether will continue to rise in price in 2021 and bring more profit to investors than the "most famous cryptocurrency" - Bitcoin.
Demand among developers
Ethereum is the leading platform for building blockchain projects and launching decentralized applications. The chart below shows the number of unique ERC-20 tokens traded amid the first year since the launch of the Ethereum network. And in spite of the fact that the rate of expansion of the market for blockchain startups has slowed down since the initial coin offering bubble burst in 2018, their total number is still increasing.
And even in spite of the fact that Ethereum has serious competitors - like Tron, Polkadot, Cardano, Cosmos, and Tezos - Vitalik Buterin’s cryptocurrency platform continues to be a leader in this direction.
Growing transaction volume
Over $1 trillion worth of transactions were recorded on the Ethereum blockchain throughout 2020. These figures exceed the transaction volume of payments giant like PayPal, which is adopted by more than 350 million users and has average volumes that do not generally outpace $200 billion per quarter.
Moreover, be cautious that each transaction generates network fees paid in ETH. And since the network's growth rates are still high, it could be confidently expected that the "bullish" trend of ETH will continue. Under any condition, interest in cryptocurrency is increasing, as is the number of active wallets, the number of transactions on the network, and the average transaction size.
Development of the DeFi sector
While Bitcoin takes the lead in the cryptocurrency market, Ethereum keeps the leader of the young decentralized finance industry. Highly popular in the summer of 2020, DeFi lending and staking projects grow continuously, drawing new investments.
The total value locked in decentralized finance since the start of 2020 has grown around 3,300%, from $687 million to $23.2 billion. And it is Ethereum that is the main platform for the creation and launch of most new DeFi projects and stablecoins.
The emission of stablecoins is continuously increasing, with digital assets backed by the value of less-volatile fiat currencies are a very convenient tool for quick settlements between users, for forming trading pairs on crypto exchanges, and for saving capital from high volatility in your crypto wallet.
Besides, it is worth noting that the interest of institutional investors in decentralized finance. While the chaos in the DeFi market nearly eroded institutional confidence in the potential of blockchain in the financial sector in the summer of 2020, listed companies continue to show interest in the new asset type.
August 2020 witnessed Archax and Algorand disclosed plans to develop tools for introducing DeFi among institutions. And in the fall of 2020, it was known that the subsidiary of the Nasdaq-traded ZK International xSigma is working to develop DeFi services and is preparing to launch a decentralized exchange for trading stablecoins.
What big investors' attention to Bitcoin led to last year is still fresh in our memories. Currently, it looks like other areas of the cryptocurrency industry are in for the same, and some of them are directly connected to Ethereum. And the main advantage of Ethereum lies in the versatility of its technology and its growing community.
As of this writing, ETH is trading at $1,475, a new all-time high.