Welcome to part two of our series of articles designed to help you understand the flow of money through different types of cryptoassets. We take a look at historical trends that appear to be driving a predictable sequence of investor behavior following a rally in Bitcoin prices.
In Part 1 of this series, we looked at why Bitcoin tends to be the first to move, its power to bring new crypto investors into the fold, and how that triggered the flow of money we discuss in this. series.
This week, we take a closer look at the second phase of the cycle, where money moves from Bitcoin to Ethereum. We will better understand why Ethereum has become the juggernaut that it is and why ground-listening investors expect it to follow Bitcoin’s bull tracks.
Why is Ethereum important?
Given the tight limit on its supply and the surprising speed at which it is adopted globally, it’s easy to see why many view Bitcoin as the cryptoactive equivalent of gold, at least from a point of view. of investment. So, with Bitcoin leading the pack in terms of becoming Money 2.0, why should an investor care about Ethereum, the second largest crypto asset by market cap?
The simple answer is that from 2021, Ethereum is expected to become the infrastructure layer on which a decentralized internet can and is being built. Entirely new sectors of digital services and innovative platforms have already emerged, and all of them rely on the ever-expanding capabilities and capacity of the Ethereum network. These are some of the most significant examples.
Decentralized exchanges, or DEX, allow digital assets to be traded without the need for an intermediary. All transactions take place securely on-chain, eliminating the need for third-party management or administration. Some of the most successful DEXs to date are Uniswap, Sushiswap, and Balancer.
A stablecoin is a cryptocurrency whose price is linked to another asset, which is often less volatile. The USDC, for example, is indexed to the price of the US dollar. Stable coins have many uses, but they are most often used for trading and storing value on crypto trading platforms. The most significant examples of stablecoins built on Ethereum include Dai, PAX, and USDC.
Lending protocols built on Ethereum have allowed users to lend their digital assets in exchange for a return, much like a normal bank would. You can also borrow cryptoassets against the collateral you have provided. All without any intermediary or involvement of third parties in the transactions. Some of the more popular decentralized lending platforms are Compound, Maker, and Nexo.
DFTs are “one-of-a-kind” digital assets that can be bought and sold like any other good. These digital tokens, which exist on a blockchain, can be thought of as certificates of ownership for virtual assets (such as in-app objects and digital art) or physical assets (such as actual paintings and even houses).
The worlds of art, finance, and games are all buzzing about NFTs right now, but one thing everyone can agree on is that Ethereum is still king in the NFT space. . The vast majority of the biggest names in the NFT space are built on Ethereum, from games like Axie Infinity, CryptoKitties and Decentraland, to tokens like Opensea and Audius.
These are just a few of the most exciting areas powered by Ethereum in the decentralized financial space. We haven’t even mentioned insurance, derivatives or asset management platforms, which are making their own waves. Nonetheless, it’s clear how important Ethereum has become in shaping the future of how people trade, win, and play.
Investing in the future of … everything
The market capitalization of ETH, Ethereum’s native token, now stands at $ 445 billion. It’s clear that ETH is winning the smart contract war, with Ethereum accounting for over 70% of all locked-in value in smart contracts. It is a juggernaut, oversized only by the giant that is Bitcoin. So, although it is still commonly referred to as “altcoin”, Ethereum is not as risky an investment as small cap altcoins. This is one of the main reasons why investors will dive deeper into crypto investing with ETH before taking slightly larger risks on smaller cap coins. Let’s look at some of the other reasons.
First, a sustained rise in Bitcoin prices invariably sets off a global media storm. This rekindles investor interest in crypto and attracts a horde of first-time crypto investors. With a stake in the crypto game, these new investors are starting to take an interest in crypto-assets in addition to Bitcoin. Like many before them, they soon discover that the weird and wonderful world of crypto extends far beyond Bitcoin.
A more diversified interest in the crypto space as a whole inevitably leads to the discovery of the multitude of exciting and fascinating technologies inhabiting the decentralized financial space. When it appears that so many of them are built on Ethereum, the potential of the network becomes an incredibly compelling investment proposition. In the graph above, the pace at which investor interest is shifting from Bitcoin to Ethereum is remarkable. We used this chart because it shows that this change in money flow is occurring roughly around the current point in the crypto cycle – the last quarter of the year. This is neither the first nor the last time that we are likely to see this trend manifest.
As the chart above suggests, making the most of the flow of money from Bitcoin to Ethereum requires buying the latter before Bitcoin’s bull run begins to lose momentum.
We’re already starting to see Ethereum move. On the last day alone, ETH managed to close the gap on Bitcoin to outperform it by 8%. Could this be the start of the great migration to Ethereum?
It’s not too late to be an early Ethereum investor
Despite the tectonic technological changes that Ethereum has brought to so many industries, the network is still in its infancy. With several major updates to the development pipeline and sites set on faster and cheaper ways to run the network, in 2021 ETH investors are still the earliest investors.
The good news is that you can buy Ethereum through Revix and pay no purchase costs between October 22 and 28. This is a great opportunity to get a head start so that when the Ethereum wave comes, you’re already riding it.
If Bitcoin is the gateway to crypto investing, Ethereum is the gateway to smaller cap altcoins and further exploration of the possibilities of a DeFi-led world. This is when things get interesting, so don’t miss Part 3 of this series right here on Friday next week.
Remember that with Revix, You can always refer a friend and get rewarded! If you refer one or more people using your referral code, you to receive Revix Awards to the value of R300 by reference.
Revix brings simplicity, confidence and excellent customer service when investing in cryptocurrencies. Its easy-to-use online platform allows anyone to securely own the world’s best cryptocurrencies with just a few clicks. Revix Guides new clients through the sign-up process to their first deposit and first investment. Once configured, most customers manage their own wallets but can access support from the Revix team at all times.
Remember that cryptocurrencies are high risk investments. You should not invest more than what you can afford to lose, and before investing, please consider your level of experience, your investment goals and seek independent financial advice if necessary.
This article is intended for informational purposes only. Opinions expressed are opinions and not facts and should not be construed as investment advice or recommendations. This article is not an offer, nor the solicitation of an offer, to buy or sell a cryptocurrency.
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