A Challenge to The Crypto Throne

While bitcoin is down just over 1% in the past week, ethereum is strengthening with a 15% rise.

During the recent crypto-frenzy, ethereum reached a peak of US$1,420 per token. The current price represents a 14.8% retrace from the high, compared to bitcoin’s 42.1% retrace.

Traders are beginning to look at ethereum as the next leader in the cryptocurrency world.

Last Friday, Florida-based Weiss Ratings, a respected emerging markets rating agency, released a market rating of cryptocurrencies, and held ethereum at a higher grade than bitcoin.

This came as a shock to some in the community. And the idea that ethereum’s market capital might grow larger than bitcoin’s is not so foreign now.

In the report, published 24 January, Weiss Ratings graded cryptos on factors including risk, security, and innovation. No coin attained a rating higher than a B, a grade achieved by EOS and ethereum alone. Bitcoin was rated a C+.

Some believe this, along with the appreciating exchange rate between ethereum and bitcoin, to be the reason for the strong up trend ethereum has shown lately.

Proof of tech

Ethereum is closing in on their ‘Casper’ upgrade, which includes a new technology called ‘sharding’.
In short, sharding is a new method of transaction verification which can cope with the growing volume of trades, and still maintain the security underpinned by its cryptography.

The upgrade will come at a good time for ethereum. With its popularity increasing, so too is the demand for the platform to maintain its high transaction speeds and low fees.

Casper and sharding technology promises innovation on the validation section of the blockchain, which is seen as the reason for bitcoin’s slow transaction times.

Vitalik Buterin, co-founder of ethereum, claims the next phase of the four-stage scaling process will be completed in a little over a month’s time. This will be followed by rigorous testing.

All in all, these are promising signs that ethereum will continue to improve and develop its technology.

A big year ahead

Another exciting event for the ethereum community called the ‘flippening’ could be just over the horizon. The term describes the point at which ethereum overtakes bitcoin as the largest cryptocurrency in terms of market capital.

The takeover will occur at the point when the exchange rate between the two tokens reaches 0.173 ETH to 1 BTC.

The rate is currently sitting at 0.107 ETH to 1 BTC.

Ethereum’s market capital currently sits at just over US$100 billion, while bitcoin hovers around US$170 billion.

Exchange developments

Bitfinex, one of the largest cryptocurrency exchanges, is now trading all pairs (of cryptos they cover) against ethereum.

This means that investors can use ethereum tokens to trade between all other cryptocurrencies. In the past most holdings had to be transferred into bitcoin first.

It seems ethereum is becoming an increasingly popular alternative to bitcoin. And at the same time, cryptos in general are creeping further and further into mainstream finance.

Further validation for the large crypocurrencies has come with Robinhood, a stock-trading application in the US popular for its zero transaction fees, now offering trading services in both bitcoin and ethereum.

Currently, ethereum is preferred as the primary coin to trade in and out of, due to the low transaction fees and high speeds.


Ryan Dinse                 

Editor, Money Morning              


Jack Cameron

Junior Analyst, Money Morning

Ryan Dinse is an Editor at Money Morning.

He has worked in finance and investing for the past two decades as a financial planner, senior credit analyst, equity trader and fintech entrepreneur.

With an academic background in economics, he believes that the key to making good investments is investing appropriately at each stage of the economic cycle.

Different market conditions provide different opportunities. Ryan combines fundamental, technical and economic analysis with the goal of making sure you are in the right investments at the right time.

Ryan's premium publications include:

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