June 1, 2023

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Cryptoverse: Ether Stabilizes in the Wake of Bitcoin in Race for the Crypto Crown

Cryptoverse: Ether Stabilizes in the Wake of Bitcoin in Race for the Crypto Crown

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SEPTEMBER 13 (Reuters) – For years, the ether could hardly dream of challenging its big brother Bitcoin. Now, her ambitions may become more realistic.

The second largest cryptocurrency is grabbing market share from Bitcoin ahead of a very important “merger” upgrade that could drastically reduce the power usage of the Ethereum blockchain, if developers pull it off in the coming days.

Bitcoin’s dominance, or market share of the crypto market, has slipped to 39.1% from this year’s peak of 47.5% in mid-June, according to data platform CoinMarketCap. On the other hand, Ether rose to 20.5% from 16%.

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The novice is still far from overtaking Bitcoin as the #1 cryptocurrency, a reversal known to enthusiasts as “volatility.” It’s made of earth, though; In January 2021, Bitcoin held a 72% share, while ether held a meager 10%.

As for the price, one ether is now at 0.082 bitcoin, close to its December 2021 highs and sharply above the 2022 low of 0.049 in June.

“People are now looking at Ethereum as a safe asset primarily because they’ve seen the success of the network, and they think it’s not going anywhere,” said Joseph Edwards, head of financial strategy at fund manager Solrise Finance.

“There is a continuity of how Ethereum is perceived in the crypto ecosystem.”

Reuters graphics

spherical caprico

Commemorative tokens representing the cryptocurrency Bitcoin and the Ethereum network, along with their original ether, sink in the water in this illustration taken on May 17, 2022. REUTERS/Dado Ruvic/Illustration

The merger, expected to take place Thursday after several delays, could expand the use of the blockchain, potentially driving up the price of ether — although nothing is certain in the volatile crypto market. Read more

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Ethereum forms the backbone of much of the “Web3” vision of the Internet where cryptography takes center stage, powering applications that include cryptographic branches such as decentralized finance and non-fungible tokens – although this much-amplified dream remains unfulfilled.

Both bitcoin and ether have nearly halved this year due to concerns about massive interest rate increases from central banks. However, investors seem to like the look of the consolidation, as ether is up more than 65% since the end of June. Bitcoin has barely fallen in the same period.

“We will see the (ether) appeal for some energy-conscious investors,” said Doug Schwenk, chief executive of digital asset research, although he cautioned that ether is still far from bitcoin.

The king is strong

Bitcoin’s diminishing dominance in the current cryptocurrency bear market is a departure from previous market cycles when investors sold fewer tokens – “altcoins” – in favor of the more liquid and reliable Bitcoin.

However, deposing the king’s throne is not easy.

Bitcoin is still by far the most popular cryptocurrency. Major investors who have been losing their heads in the cryptocurrency market since 2020 tend to turn first to Bitcoin, as the most liquid and most widely traded token.

Its market capitalization of $427 billion is still more than double that of ether’s $210 billion, and market participants firmly believe that the original digital currency remains the gold standard in crypto due to limited supply.

Some market players say Bitcoin’s grip on the cryptocurrency crown remains strong, even if it has to accept other competitors. For example, Hugo Xavier, CEO of K2 Trading Partners, said his dominance could improve to the 50%-60% range if the crypto market turns bullish but is unlikely to touch 70% again.

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Additional reporting by Medha Singh and Lisa Pauline Matakal in Bengaluru; Editing by Tom Wilson and Praveen Shar

Our criteria: Thomson Reuters Trust Principles.

The opinions expressed are those of the author. They do not reflect the views of Reuters News Agency, which is committed under the principles of trust to impartiality, independence and freedom from bias.