Here’s Why Ethereum Is Faring Better Than Other Cryptos
Cryptocurrencies are in an unholy mess. It feels like the sky is falling as we watch the crypto markets crash to new lows. But for some reason, there’s a ray of hope shining for one crypto.
Of all the top 10 cryptocurrencies, there’s only one that has managed to weather this storm better than the rest. Ethereum is the only cryptocurrency that stood guard for investors through these tumultuous times.
How exactly has this cryptocurrency managed to do that? I’ll divulge more information on that shortly. But first, let’s take a step back and acknowledge Ethereum’s steady endurance through this absolute mayhem.
Just compare the price performance of three of the most popular cryptocurrencies—Bitcoin, Ripple, and Litecoin—with that of Ethereum. While all three got butchered in the crypto bloodbath, Ethereum survived with barely a few scratches.
Ethereum prices are actually up despite the broader market crash! Yes, you read that right. It’s mind-boggling.
Chart courtesy of TradingView.com
The Chart That Shows Why ETH Prices Are Up Through the Crash
I’ve been trying to make sense of this. What could possibly be the reason for markets to be treating this cryptocurrency differently than the others? I may have finally put my finger on it.
It doesn’t take one to be a high-functioning genius to understand that in the case of cryptocurrencies, where supply is constant, the only factor affecting prices is demand.
So the only reason ETH prices are remaining stable is that buyers demanding this coin are continuing to balance the scale. For other cryptocurrencies, the scale has tipped in favor of the sellers because there is now a dearth of buyers.
The question is, where is the demand flowing from and why?
I’ve made my case before why Ethereum can withstand the selling pressure. It’s because this digital currency, unlike other cryptos, creates its demand from within.
Just to remind you, Ethereum is not a crypto vying to replace our financial system (like Bitcoin or Litecoin) or looking to improve it (like Ripple). Thus, it has neither any nemesis to fight nor does it need any allies to lean on to survive, as do the other cryptos here.
A heads-up for my readers new to this space: Ethereum is a blockchain-based platform for creating applications. It’s as simple as that.
You could be a huge global enterprise, a local retailer in a small town, or merely a student doing your annual project, and you can create your blockchain application with Ethereum, get people to join it, and even make money on it. Ethereum’s technology, offering a decentralized platform to conduct friendly business, is open to to all and sundry.
The catch is that Ethereum requires you to use its cryptocurrency “ether” to use its network. You could use ether or create your own cryptocoins that use ether. Either way, transactions on the network must take place in ether.
In other words, the more decentralized applications (DApps) are built on Ethereum, the more demand there will be for ether.
At the time of writing, the number of applications built on Ethereum is approaching 1,000. (Source: “A curated list of 996 decentralized apps built on ethereum,” State of the DApps, last accessed February 2, 2018.)
Less than a month ago, when I made my nearly accurate Ethereum price prediction for 2018, the number stood at 930. So, it’s obvious that new DApps are being added to the network each passing day.
But are they actually driving demand for ether? That’s exactly what’s verified in the chart below.
Take a look at the number of transactions (in thousands) conducted on Ethereum versus the most sought-after cryptocurrency in the world—Bitcoin—in the trailing months.
Historically, Bitcoin transactions always remained greater than that of Ethereum. That’s until July of last year when Ethereum’s transactions volume surpassed Bitcoin’s. While both jointly grew until December, a huge diversion appears at the beginning of this year.
This is the inflection point beyond which prices of the two cryptos decoupled and headed in opposite directions. In other words, this is the point where Ethereum passed the litmus test of having the ability to create organic demand.
In the case of other cryptocurrencies, the majority of the market participants are speculators. Contrarily, Ethereum has found actual users driving demand for its cryptocurrency. And the number of these users is predictably going to go up in the coming days.
That’s because Ethereum is continually forming new strategic partnerships with big businesses around the globe. The Enterprise Ethereum Alliance (EEA)—an organization created for promoting Ethereum—is solely focused on generating demand for this digital currency.
To name a few major corporations that have signed up with EEA, there are tech heavyweights like Microsoft Corporation (NASDAQ: MSFT), Intel Corporation (NASDAQ: INTC), and Cisco Systems, Inc. (NASDAQ: CSCO).
Likewise, global banking industry giants have also grown interest in Ethereum. Count in notable EEA members like JPMorgan Chase & Co. (NYSE: JPM), Credit Suisse, Barclays PLC (LON: BARC), and UBS Group AG (NYSE: UBS).
It’s easy to predict that with these major businesses showing interest in moving one or more of their business lines to Ethereum, demand for this digital currency may continue to head north. The rest is history.
The great cryptocurrency crash of 2018 will probably go down in history as a life-changing event for many naive investors who jumped down the rabbit hole without much of a thought. Today, they regret not having exercised due diligence and self-discipline in their investments.
It should have become glaringly obvious to investors now that not all cryptocurrencies are worth their money.
Ethereum is one cryptocurrency that has stood the test of time because of its strong fundamentals. Through this crash, ETH prices have seemingly decoupled themselves from other cryptos and are holding steady.
Forget the rest for now. This is one digital currency investors need to be watching.