Bitcoin’s price rally has stalled after a brilliant start to the year with Ethereum, the second largest cryptocurrency after Bitcoin, which has also fallen sharply from its peak.
Bitcoin price has lost a third of its value since soaring to nearly $ 65,000 per bitcoin in April, while Ethereum price has plummeted nearly 50% since its mid-May high – though Ethereum’s rally has dwarfed the Bitcoin price surge during the last 12 months.
As Wall Street giants and retail investors flood the crypto market, traders try to predict if Ethereum will continue to outperform Bitcoin– with $ 100 million, the chief investment officer of Two Prime, the digital asset investment manager, who predicts that Ethereum will eventually “flip” Bitcoin.
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“In the long, long, multi-year timeline, Ethereum will turn Bitcoin around,” says Two Prime’s Nathan Cox. “It is only just beginning to be understood by the second tier users. The benefits of Ethereum alone will surpass everything else.”
Bitcoin, priced at $ 40,000 per coin, has a market capitalization of around $ 750 billion, while Ethereum, at $ 2,500 per ether token, has a total value of nearly $ 300 billion. However, Ethereum closed the gap with Bitcoin in the last year and is up 1,000% compared to Bitcoin’s 300% rally.
The Ethereum price has broken out this year partly because of the rising popularity of decentralized finance (DeFi)– Using cryptocurrency technology to recreate traditional banking products such as loans and insurance and build on Ethereum’s blockchain. Meanwhile, the NFT (non-fungible token) craze, which saw all kinds of memes, digital art, tweets, and YouTube videos being sold on Ethereum’s blockchain, has further fueled demand for Ether.
“Bitcoin is digital gold, but Ethereum is digital oil,” says Cox. Caymen Islands-based Two Prime, which offers investors exposure to Bitcoin and Ethereum through its funds and targeting $ 250 million in assets under management by the end of the year, has a liquid yield fund designed to diversify fixed income hung up.
“Our outlook is generally optimistic,” says Cox, pointing out that El Salvador’s plans for widespread Bitcoin adoption across the country are “more significant” than originally thought. “Most of the pain from this pullback has probably already been experienced.”
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Meanwhile, others in the cryptocurrency industry remain bullish despite significant declines in Bitcoin and Ethereum.
“Sentiment towards the king of cryptocurrency continues to shift into positive territory,” said Paolo Ardoino, chief technology officer of the British Virgin Islands-based bitcoin and cryptocurrency exchange Bitfinex, in e-mail comments and warned against it People like Tesla billionaire Elon Musk and high profile investors like renowned hedge fund manager Paul Tudor Jones still have an oversized impact on crypto prices.
This week, Tudor Jones gave Bitcoin price a boost than he did said he was aiming for a bitcoin allocation of 5%, down from just 2% previously.
“While the past few days have shown once again that celebrities and the movers and shakers in the room can influence the price, it won’t last forever,” said Ardoino. “The momentum that has given Bitcoin increasingly recognition as an asset class continues to gather momentum.”