Why Is Ethereum Leading the Crypto Universe to Higher Levels?
The entire cryptocurrency universe is off to a roaring start for 2020. During the first five weeks of the new year, all of the major digital currencies have recorded bullish breakouts. Typically, Bitcoin (BTC) is the leader in most crypto bull markets. However, the 2020 bull market has a new leader. Ethereum (ETH) finds itself easily outperforming BTC. As of Feb 6, ETH had advanced 71.6%. During the same time period, BTC had rallied 36.6%. ETH is leading BTC by almost 100% (see chart #1). Why has Ethereum been on such a tear lately? Will ETH continue to be the crypto leader for 2020? Is it possible that ETH will replace BTC as the leader of the cryptocurrency universe? Let’s examine the details.
Chart 1: The Stellar Performance of ETH
Comparison Between Ethereum and Bitcoin
First, let’s begin by briefly discussing the similarities and differences between ETH and BTC. In terms of similarities, both are digital currencies traded through online exchanges. Ethereum and Bitcoin are decentralized, which means that they are not issued or regulated by a central bank or online authority. Additionally, both use blockchain technology, which is used, among other things, for maintaining a decentralized payment network.
What is the difference between Ethereum and Bitcoin? The main difference is that Bitcoin is nothing more than a currency. Ethereum, on the other hand, is a ledger technology used by companies to build new programs and applications. Bitcoin’s main purpose is to be used as a store of value and medium of exchange. The ultimate objective is for BTC is to replace national currencies such as US Dollar, Japanese Yen, Euro and British Pound. The main objective of ETH is to create immutable, cryptographically secure contracts and applications using its own currency, known as ether.
In regard to daily volume and market capitalization, Bitcoin easily leads the cryptocurrency universe. Ether is a distant second. As a Feb 9 BTC’s market cap was $183.2 billion. ETH’s market cap was $24.8 billion. During the past 30 days, the average daily trading volume for BTC is $35.9 billion, compared to $14.8 billion for ETH.
Despite Bitcoin’s dominance within the crypto ecosystem, investors are beginning to realize that Ethereum’s technology has the potential to provide a more sustainable impact on projects across multiple industry groups versus Bitcoin. Without question, Ethereum has substantially more use case scenarios than Bitcoin. Let’s explore a few of them.
Ethereum Use Case Scenarios
In 2017, IBM and Wal-Mart teamed up to create a blockchain solution for reducing waste and spoilage throughout Wal-Mart’s fresh produce supply chain. Even though this particular project between IBM and Wal-Mart did not rely on the Ethereum blockchain, it did encourage other companies with supply chain concerns to develop their own blockchain solutions.
One such solution is a blockchain platform known as Quorum, which is powered by Ethereum. Quorum is very similar to the project created between IBM and Wal-Mart. It allows large businesses to manage their supply chains in a more cost-effective manner.
In 2019, four of the world’s largest grain merchants joined forces to significantly reduce shipping delays in regard to grain shipments between countries. The companies involved in the project include Archer Daniels Midland, Cargill, Bunge and Louis Dreyfus. The official name of the project is Covantis. Although the initial phases of the project were unveiled in 2019, Covantis won’t be launched until mid-2020.
Specifically, Covantis will use the Ethereum blockchain to work with grain merchants, grain suppliers, and end-users to develop a more seamless distribution network among all participants in a typical grain transaction. Thanks to the Ethereum blockchain, 60% of the delivery chain will become automated, which will increase transaction speeds by 70%. By incorporating the Ethereum blockchain, Covantis will eliminate the vast majority of manual processes. Consequently, this will dramatically reduce error rates among all participants. Covantis is projecting a reduction in error rates by 80%.
Of course, another important use case for the Ethereum blockchain is the Digitex Futures exchange. Digitex has developed a zero-fee trading exchange by minting its own native currency, the token. In regard to customer account balances, Digitex is seeking to replace centralized account balances with an independent smart contract on the Ethereum blockchain. The smart contract will hold all account balances. Thanks to the Ethereum blockchain, Digitex is on the verge of disrupting the futures industry.
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Is Ethereum on the Verge of a Bullish Breakout?
ETH is off to a roaring start for 2020. The digital currency gained 71.6% during the first five weeks of 2020. Has Ethereum entered a new bull market? Please review Chart #2 below.
The short-term trend turned bullish when ETH penetrated 223.99. However, the long-term trend is still in favor of the bears. ETH suffered a brutal decline in 2018, along with the entire cryptocurrency universe. In order to recapture the momentum, the bulls need a weekly close above 996.95. At least for now, the long-term trend is bearish. Please review Chart #3 below.
DGTX Outperforms ETH
It’s official. will roll out the on April 27. Within the next 10 years, there is a very good chance that cryptocurrency derivatives volume could exceed the trading volume on traditional futures exchanges. Thanks to its commission-free platform, Digitex could easily become the industry leader in the crypto derivatives space. The sky’s the limit!
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Even though Ethereum has enjoyed a sharp rally during the past five weeks, it still has not been able to match the performance of the Digitex native currency since the ICO date on Jan 15, 2018. DGTX has advanced 236% since 15 January 2018. During the same time period, ETH has lost 82% of its value.
In fact, DGTX has outperformed all of the major cryptocurrencies since January 2018. Of course, there are no guarantees that the value of DGTX will continue to increase. However, based on the fact that Digitex is 10 weeks away from the mainnet launch, DGTX has the potential to move much higher over the course of the next several months.
Digitex Futures writers and/or guest authors may or may not have a vested interest in the Digitex Futures project and/or other businesses mentioned throughout the site. None of the content on Digitex Futures is investment advice nor is it a replacement for advice from a certified financial planner.