Although it is a somewhat controversial claim, some analysts support the idea that Ethereum is currently undervalued and potentially can reach the same market capitalization value as Bitcoin.
Ethereum may be ‘Bullish’ in the long run
As Ethereum approaches its fifth anniversary, some market analysts are waiting for its revival, especially in the context of the likely altcoin season that we would be seeing at the beginning.
On Monday, the 13th, John Lilic, who works at the blockchain company ConsenSys, reminded the crypto community that Ethereum is moving slowly but steadily towards parity in market capitalization with Bitcoin, mentioning a old tweet that he published on January 5.
Today, Bitcoin’s market capitalization is over $ 170 billion. Ethereum ranks second with just under $ 27 billion. However, at the beginning of the year, the difference was even greater in favor of Bitcoin, so it seems that the older crypto is in fact losing ground.
John cited that Bitcoin’s market capitalization is now 6.3 times that of ETH, compared to 10 times that it was at the beginning of the year. The amount of fees generated by Bitcoin has dropped to 80% compared to the total fees on Ethereum, after generating twice as many fees as Ethereum in January.
“ETH is undervalued and we are, in fact, on the road to equality with Bitcoin in terms of market capitalization,” he concluded.
Updated thread since Jan 5
The mkt cap of $ btc is now ~ 6.3x that of $ eth. The amount of fees generated by #bitcoin is now ~ 4 / 5th’s that of #Ethereum. The price of ETH has appreciated ~ 37% against BTC so far in 2020. ETH is undervalued & we are headed towards mkt cap parity. https://t.co/MjwmwqtobL pic.twitter.com/ExeMVBgPeg
– John Lilic (@JohnLilic) July 13, 2020
Updated January 5th post: BTC’s market capitalization is now 6.3x higher than that of ETH. The amount of fees generated by BTC is now ~ 4 / 5th’s of ETH’s. The price of ETH has grown 37% against BTC so far this year. ETH is undervalued and we are heading towards parity in market capitalization.
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Other metrics also point to an undervalued Ethereum
Before Bitcoin maximalists start laughing, they should look at other metrics that suggest the fact that ETH is undervalued. One of the main indicators that the Ethereum network is currently being used more than ever is the use of Gas.
On Ethereum, gas is consumed in all transactions made in the network’s decentralized applications (dApps) – for example, when trading on decentralized exchanges or playing NFT games. The point is that the greater the use of gas, the greater the demand for Ethereum dApps, which is a positive sign for the long-term price of ETH.
The amount of gas used in Ethereum hit a historic high in early July and is now consolidated close to the peak.
At the end of May, Blockfyre – the German crypto research company – spoke of the use of gas along with three other metrics as clear signs of undervaluation for ETH.
1) We charted several progress indicators for Ethereum against its price development since its genesis.
Besides other factors, the following 4 indicators have caught our interest the most.
We feel comfortable to state that Ethereum is significantly undervalued at current prices pic.twitter.com/RezhESApZk
– Blockfyre (@blockfyre) May 26, 2020
We have listed several progress indicators for Ethereum versus the price development since its creation. In addition to other factors, these four indicators were the ones that most caught our attention. We comfortably state that ETH is currently undervalued.
In addition, Bitcoin has full attention due to the halving and its safe harbor status, which may have caused some overvaluation, even below $ 10,000. It would be better if investors also paid attention to ETH 2.0, the update that could change the network forever.
However, there is still a likelihood that Ethereum may never achieve market capitalization parity with Bitcoin, as ETH is in some ways threatened to be collectively overtaken by other tokens, including ERC20, such as ChainLink and VeChain.