Here’s why Ethereum is doing better than other cryptos
Cryptocurrencies are in an unholy mess. It feels like the sky is falling as we watch the crypto markets drop to new lows. But for some reason there seems to be a glimmer of hope for a crypto.
Of all the top 10 cryptocurrencies, only one weathered this storm better than the others. Ethereum is the only cryptocurrency that kept investors vigilant during these turbulent times.
How exactly did this cryptocurrency do it? I will post more information on this shortly. But let’s take a step back first and acknowledge Ethereum’s steady persistence through this absolute chaos.
Simply compare the price development of three of the most popular cryptocurrencies – Bitcoin, Ripple and Litecoin – with that of Ethereum. While all three were slaughtered in the crypto bloodbath, Ethereum survived with barely a few scratches.
The prices for Ethereum have actually increased despite the general market crash! Yes, you read that right. It’s amazing.
Chart courtesy of TradingView.com
The graph that shows why ETH prices have risen due to the crash
I tried to understand this. What could possibly be the reason for markets to treat this cryptocurrency differently from the others? I may have finally put my finger on it.
It doesn’t take a high-functioning genius to understand that with cryptocurrencies where supply is constant, demand is the only factor that affects prices.
The only reason ETH prices remain stable is because buyers demanding this coin continue to balance the scales. For other cryptocurrencies, the scale has shifted in favor of sellers as there is currently a lack of buyers.
The question is, where is the demand coming from and why?
I’ve already explained why Ethereum can withstand the pressure to sell. This is because, unlike other cryptos, this digital currency generates its demand from within.
Just to remind you, Ethereum is not a crypto that seeks to replace our financial system (like Bitcoin or Litecoin) or improve it (like Ripple). So it doesn’t have an enemy to fight, nor does it need allies to rely on to survive, like the other cryptos here.
A heads up for my readers who are new to this area: Ethereum is a blockchain-based platform for building applications. As simple as that.
You could be a huge global company, a local retailer in a small town, or just a student running your annual project, and you can build your blockchain application with Ethereum, get people to join it, and even make money from it . Ethereum’s technology, which provides a decentralized platform for friendly business, is open to everyone and everyone.
The catch is that Ethereum requires you to use its cryptocurrency “Ether” in order to use its network. You can use ether or create your own cryptocoins that use ether. In any case, transactions in the network must take place in Ether.
In other words, the more decentralized applications (DApps) are based on Ethereum, the greater the demand for ether will be.
At the time of writing, the number of Ethereum-based applications is approaching 1,000. (Source: “A curated list of 996 decentralized apps based on Ethereum”, State of the DApps, last accessed February 2, 2018.)
Less than a month ago, when I made my near-exact price prediction for Ethereum for 2018, the number was 930. So it’s obvious that new DApps are being added to the network every day.
But are they actually driving the demand for ether? This is exactly what is verified in the following table.
Check out the number of transactions (in thousands) made with Ethereum in the past few months compared to the world’s most sought-after cryptocurrency – Bitcoin.
In the past, Bitcoin transactions have always been larger than Ethereum’s. By July last year, Ethereum’s transaction volume exceeded that of Bitcoin. While both of them grew together through December, a tremendous distraction is showing up earlier this year.
This is the tipping point at which the prices of the two cryptos decouple and move in opposite directions. In other words, this is where Ethereum passed the litmus test to have the ability to generate organic demand.
When it comes to other cryptocurrencies, most market participants are speculators. In contrast, Ethereum has found that actual users are increasing the demand for its cryptocurrency. And the number of these users is expected to increase in the coming days.
That’s because Ethereum is constantly forming new strategic partnerships with large companies around the world. The Enterprise Ethereum Alliance (EEA) – an organization promoting Ethereum – focuses solely on generating demand for this digital currency.
To name a few big companies that have signed up with the EEA, there are tech heavyweights like Microsoft Corporation (NASDAQ: MSFT), Intel Corporation (NASDAQ: INTC) and Cisco Systems, Inc. (NASDAQ: CSCO).
Likewise, global giants of the banking industry have grown interest in Ethereum. Count in well-known EEA members like JPMorgan Chase & Co. (NYSE: JPM), Swiss credit, Barclays PLC (LON: BARC) and UBS Group AG (NYSE: UBS).
It is easy to predict that given that these large companies have an interest in moving one or more of their businesses to Ethereum, the demand for this digital currency will continue to trend north. The rest is history.
The major cryptocurrency crash in 2018 is likely to go down in history as a life-changing event for many naïve investors who jumped down the rabbit hole without much thought. Today they regret that they did not exercise due care and self-discipline in their investments.
It should now have become obvious to investors that not all cryptocurrencies are worth their money.
Ethereum is a cryptocurrency that has proven itself due to its strong fundamentals. As a result of this crash, the ETH prices seem to have decoupled from other cryptos and remain stable.
Forget the rest for now. This is a digital currency that investors need to watch out for.