Bitcoin is the number one crypto but is constantly under attack. If Bitcoin wants to catch up with rival Ethereum’s performance YTD (year to date), the price would be approaching $100,000 USD. This is the belief of Bloomberg senior commodity strategist Mike McGlone.
Ethereum is well up on Bitcoin in terms of YTD performance, increasing by a spectacular 320 percent vs. Bitcoin’s 54 percent return. However, according to Mr. McGlone, Bitcoin could soon catch up to the gains posted by Ether, pushing the per-unit price of Bitcoin to $100,000 USD. McGlone tweeted this sentiment on August 9, the same day that the price of Bitcoin broke through the $46,000 USD ceiling.
Although McGlone did not go into a detailed discussion on the factors that would see Bitcoin match the yearly gains of Ethereum, a report presented earlier did cite a few catalysts that have the potential of propelling the leading crypto price into six figures.
Massive Amount of Money Waiting on the Sidelines
The backers of Bitcoin believe the crypto can compete head-on with the U.S. dollar to become a global reserve asset. One of the reasons cited is the fact that Bitcoin has a fixed supply cap. To proponents of Bitcoin, this makes it sounder than the dollar. In 2020 alone, the Federal Reserve printed and issued $3.1 trillion USD.
This resulted in Bitcoin closing at the end of 2020, 260 percent higher, tending to reinforce the argument that investors see it as an effective tool against dollar-led inflation.
Early in the year, Goldman Sachs conducted a survey, the results of which indicated the pent-up demand amongst institutional investors for Bitcoin. These investors included pension funds, sovereign wealth funds as well as foundations. Even though these and other institutions had trillions of dollars in their reserves, the lack of clear, concise cryptocurrency regulations kept these accredited investment groups from placing the funds in the Bitcoin market.
Analysts associated with Autonomous Capital Management noted that a regulated exchange-traded fund for Bitcoin would accelerate the adoption of Bitcoin among institutional investors. Furthermore, the same analysts noted that while investors see Bitcoin as a very volatile asset, the fact that it lacks traditional risk factors will play well with them.
The ACM analysts noted that should the assumption be made that Bitcoin would be weighted in the same way that gold is in investor’s portfolios, its price would be at least 2.8 times higher, making it approximately $112,000 USD.
Toe to Toe Rivalry with Ethereum
Despite the prospects of adoption on Wall Street, the dominance of Bitcoin has dropped considerably after maxing out at close to 75 percent in December of last year. Today, Bitcoin stands at a little over 47 percent, which tends to reflect the fact that traders have repositioned their investments to alternative digital assets.
As a result, Ethereum has improved its position considerably, now the biggest benefactor of the rapidly falling Bitcoin dominance index. From December 2020 to this time, Ethereum’s dominance has increased from a little over 10 percent to slightly over 20 percent.
The reason for Ether’s increase appears to have a great deal to do with the rising dominance of NFT’s, non-fungible tokens. NFT’s are digital files whose scarcity as well as originality can be validated using a public ledger.
In addition, there is a boom in the space occupied by decentralized finance. This consists of financial services, including lending, borrowing, and others built on top of the Ethereum blockchain. This has accelerated the adoption of Ethereum among the crypto population.
The developers of Ethereum are also taking the necessary steps to scale the blockchain. August saw Ethereum update its software with what is known as the “London Hard Fork,” with the aim of becoming a fully-fledged Proof-of-Stake protocol in the future.
This update had another benefit. It added deflationary pressure on the supply. Improvement proposal EIP-1559 brought with it a reduction in the fee. On the first day of adoption, EIP-1559 resulted in eliminating over $2 million USD in either tokens. This feature eliminated approximately $5.5 million USD of Ethereum as of Monday.
Based on past performance, McGlone suggested that Ethereum could surpass Bitcoin in terms of market cap as early as next year or 2023. McGlone went on to say there appears there is little that can be done to retard the process of Ethereum flipping.
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