Digital Assets Beat Traditional Assets by a Wide Margin & Ethereum Outperforms Bitcoin
In 2020 to date, Bitcoin has seen a positive performance of 80% and Ethereum 217%.
With these gains, digital currencies are leading this year, with both the top digital assets outperforming traditional asset classes, that too by a wide margin.
Clearly, Ether has enjoyed much higher performance than Bitcoin, just yesterday it also caught up with BTC’s latest move. ETH went to $420 and is currently trading around this level only.
The realized price of Ether, the average price for each ETH at the time it last moved on-chain, actually hit a 21-month high, at $246, a level not seen since January 2019. In the past six months, it has increased by 21%.
“I get not being long ETH, but I don’t get why anyone would be short ETH against what is to me the single most important protocol upgrade and token incentives change since the beginning of Ethereum in 2014,” said Qiao Wang.
It has been because of DeFi and stablecoins crazy growth this year, which saw Ethereum beating Bitcoin not just in terms of price but also in transaction volume as it transacted two times more value than BTC daily.
“Ethereum’s progress has been so incredible that it will likely becomes the first public blockchain ever to settle $1 trillion in a year,” said Ryan Watkins, a researcher at Messari.
Much of this growing activity has been because of stablecoins, especially ERC-20 USDT, with Tether alone doing more volume daily, nearly double, than Bitcoin.
When it comes to DeFi, Yield farming phenomena and decentralized exchanges (DEX) play a big part. DEXs now comprise 13.6% of total volumes from all exchanges (CEX+DEX). Uniswap and Curve did more than $20 billion in combined volume last month, resulting in a boom in on-chain liquidity on Ethereum.
However, as Ethereum becomes the “epicenter of crypto finance,” it comes at the cost of extremely high fees pricing out retail users and pushing some apps out too.
And this allows alternative platforms to gain attention and adoption. According to Messari, 5 layer 1 alternatives raised a combined $138 million over the quarter.
“The next 12 months could come to define the smart contract market as almost every high-profile Ethereum competitor will be live by year-end. And these networks are barrelling towards a head-to-head battle with Ethereum’s bevy Layer-2 scaling solutions,” said Wilson Withiam of Messari.