Ethereum is back and nibbling at the heels of bitcoin

Ethereum, or ether for short, is also traded at record levels. It now hovers around $ 4,850, having risen more than 560% this year compared to the “mere” 135% pop for bitcoin. Crypto investors are betting that ether will continue to be used as the backbone of even more non-fungible tokens, or NFTs, as well as so-called smart contracts.

Experts predict that this wave of decentralized financing (DeFi) will become more widespread in the banking sector. That could be good news for ether, as well as solana, another crypto that has blockchain technology used in DeFi applications.

Ether, which now has a total value of about $ 575 billion for all of its coins in circulation, has also narrowed the market value gap with bitcoin, which is worth about $ 1.3 trillion. The two cryptocurrencies now make up nearly two-thirds of the nearly $ 3 trillion market for cryptocurrency.

“We are seeing a shift in the industry, where bitcoin went from being 75 percent of the total market value of cryptocurrency to about 50 percent,” said Michael Pinsker, founder and president of technology company Docupace, which is wealth management, about the decline in bitcoin’s market share. since 2017. “That percentage should fall even more.”

More investors are flocking to ether

Ether has also become more popular with many traders in the crypto brokerage business Coin base.

In its latest earnings report after the closing bell on Tuesday, Coinbase said 22% of its third-quarter trading volume was for ether, compared to 19% for bitcoin. It’s the second in a row quarter where ether trading was higher than bitcoin.

There may even be a so-called “flipping” in the next decade where the value of ethereum ends up topping bitcoin, said Jared Madfes, a partner at Tribe Capital.

That renewable inflation is also for the benefit of ether and other cryptocurrencies. Consumer prices continue to rise and investors recognize that digital currencies are gaining value at a time when interest rates remain low and the Fed and other central banks are pumping money into the economy.

“Inflation is not disappearing. Central banks printing money are a divide that cannot be crossed,” said Dylan LeClair, head of market research at Bitcoin Magazine.

The rise of bitcoin ETFs may also be good news for ethereum, as experts predict that similar ether ETFs may be launched soon. This will make it even easier for average investors and large money management companies to buy into the crypto.

“Institutions want more exposure to cryptocurrencies, so I expect there will be ether ETFs,” Tribe Capital’s Madfes said.

Experts say, stick to ether and bitcoin and avoid meme coins

Still, investors need to be careful when buying cryptocurrencies. Not all of them have practical applications.

There are now many so-called meme coins out there, such as dogecoin and shiba inu, which has risen in price thanks to hype on social media (including from Tesla (TSLA) CEO Elon Musk) and others more stupid reasons.
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“Crypto is now very similar to the 1990s and the Internet,” said Eric Satz, CEO and founder of Alto, an investment firm offering a crypto-IRA. He refers to the many e-commerce companies that were listed and rose sharply at the time. But only one true leader, Amazon (AMZN), still stands today.

“There are a whole lot of cryptocurrencies out there. But there will be a lot of roadkill. Investors need to proceed with caution,” Satz said, adding that he recommends investors have a crypto portfolio consisting mainly of bitcoin, ether and solana.

Ray Youssef, co-founder and CEO of Paxful, a crypto-trading platform, has an even more cautious stance. Crypto investors should not hold dogecoin, shiba inu or any of the other more speculative cryptos, he said, because major corrections await ahead.

It’s like the stock market in this respect: One thing is to own shares of Apple (AAPL), Microsoft (MSFT) or another top company in S&P 500. Meme shares are another story.

“Ether and bitcoin versus meme coins are like the difference between blue chips and penny stocks you get a call about from a guy in a boiler room,” Youssef said.

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