ETH to deliver stronger returns than BTC in 2021

ETH to deliver stronger returns than BTC in 2021
Image by Patrick Gantz from Pixabay

Key Takeaways

  • ETH return believed to surpass that of BTC by 35 percentage points this year
  • Majority of survey respondents think Etherium has many advantages above Bitcoin
  • ETH/BTC relative price rises as the battle for leadership continues

YEREVAN (CoinChapter.com) — On July 20, Finder reported the results of a survey of forty-two crypto and finance specialists. Despite a few outliers, the overall consensus was that Ethereum (ETH) is here to stay and possibly even surpass the market leader like Bitcoin in several areas.

The average price predictions of panelists are as follows: ETH price will increase by 157% at the price level of $4,596 by the end of 2021, while BTC will follow a 122% increase to $66,284.

At the time of press, Ethereum’s price stands at $2,021, and Bitcoin trades for $32,300. 

Why Ethereum may flip Bitcoin

According to Allnodes CEO, Konstantin Boyko-Romanovsky there are several reasons why ETH will grow twofold to hit an all-time high of $5,000 at year-end.

“Upgrading to a deflationary type of asset, Level 2 networks, institutional adoption, mass utilization, DeFi and dapps continuous development and rise — are all contributing factors to Ethereum’s future price appreciation.”

Most of the reasoning behind such bullish forecasts surrounded the prospects of DeFi projects built on the Ethereum blockchain. Bitcoin has allegedly failed to compete against the traditional financial system. Instead, Ethereum-based DeFi may succeed in gaining that much relevance.

Another explanation for optimism in ETH is that as the technology moves entirely to a Proof-of-Stake (PoS) protocol, it will become a more stable and valuable store of value than Bitcoin. 

Related: Ethereum pumps 16% as Elon Musk claims he owns ETH. What’s next?

As opposed to proof-of-work, this system is less costly and less susceptible to inflation. In addition, it does not require energy-consuming mining. The protocol even discourages buying since the liquidity pool adjusts to devalue the assets owned by the investor.

On the other hand, PoS networks are more centralized and give large holders excessive power to make decisions. Taking both sides into account, the majority (67.5%) of panelists believed the market cap of ETH would surpass that of BTC sooner or later.

Moreover, 93% expressed that Ethereum will become more widely transacted even if it does not overthrow Bitcoin’s market cap. The overwhelming majority believe this will happen by the end of 2022.

The support of this idea is overwhelming because BTC transactions take more time and cost more than those of ETH, which is essentially due to the PoS protocol.

ETH occupies the leader’s seat in DeFi, for now…

Ethereum’s position in DeFi is also questioned as more altcoins surface to offer the same or higher functionalities to the blockchain community. However, a little over half of the respondents believed ETH would hold its leading position in Defi, stressing its first-mover advantage.

The bullish support of ETH is remarkable, according to the report. Nevertheless, the blockchain industry is highly competitive. Therefore, anyone wishing to attain and hold a leading position should be up to the minute with its developments. 

The whole picture

A few of Ethereum’s cornerstones are the deployment of multi-functional decentralized apps (Dapps), improvements in accessibility, processing speed, security, and scalability. New partnerships with large companies and governments are also under growing emphasis.

Related: Institutions love for Ethereum grows ahead of milestone network upgrade

The global relevance and acceptance of the cryptocurrency largely depend on Ethereum’s ability to solve its security problems. In 2021 alone, several ETH-based DeFi projects have suffered from multi-million dollar hacker attacks and ICO scams. 

The narrative suggests that in Defi, Ethereum is its strongest competitor and only a temporary second-best in the cryptocurrency market. In terms of current price predictions, ETH and BTC prices are still highly correlated. 

ETH grows relative to BTC.
ETH grows relative to BTC. Source: TradingView.com

After all, the fluctuations of investment interest in cryptocurrencies reflect on the movements of these assets individually. Nonetheless, the relative price ETH/BTC is on a long-run uptrend since the start of 2020. 

The recent intersections of short-term moving averages show some stabilization at about 0.063. However, in the past, when the comparable price soared well above this number, even sharper downslides followed.

The variables in this equation are many and varied, not to mention challenging to predict. Even so, the future of Ethereum looks bright, at least from where many prominent specialists are standing.

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