2021 has been a great year for Ethereum. The 31st As of December 2020, ETH / USD was trading in the low area of $ 700. As the end of December 2021 approaches, ETH is trading north of $ 4,000 per token. This equates to gains over the year of over 300%. This compares to an annual cumulative return for BTC / USD of only around 80% at the time of writing.
ETH / BTC subsequently increased significantly in 2021, from less than 0.03 to current levels near annual highs of around 0.08. On Friday morning, Ethereum’s total market cap was just under $ 500 billion, while Bitcoin’s was just under $ 1 billion.
Emerging growth of Web3 drives ETH outperformance
Cryptocurrency analysts attributed this year’s outperformance of Ethereum over bitcoin to the former’s greater flexibility in integrating with dApps, Challenge and TVN projects. Indeed, there has been an explosion of interest in these areas in 2021, as well as popular coins such as Shiba Inu, with most projects in these areas being built from the Ethereum blockchain.
“Ethereum, helped by the excitement of its potential to fuel the nascent web3 and the hype surrounding Ethereum-based NFTs (non-fungible tokens)… rushing to fund Ethereum-based projects,” BOOX Research said.
“In many ways, NFTs and alt-tokens operating within Ethereum are the first manifestations of the potential of the metaverse… Ethereum can play an important role in (making) the digital economy globally accessible… We still don’t know which direction the apps will take over the next few years, but we see ETH as a bet on that future, ”the cryptocurrency research house continued.
Key themes for 2022
Web3 was a buzzword in the cryptocurrency space in 2021, and most tech analysts suspect that the hype behind the idea is only likely to gain momentum in 2022. As long as the Etheruem blockchain will continue to be seen as a key element of emerging decentralization. web, growth in this space should maintain the ETH offering.
According to billionaire investor Mike Novogratz speaking recently on CNBC, “people see ethereum as a technological bet and bitcoin more as a debasement of the fiat money bet.” As the US Federal Reserve adopts a more hawkish stance in 2022 to fight inflation which reached nearly four-decade highs in the US in November at 6.8% yoy, Novogratz expects that the macroeconomic environment continues to favor Ethereum.
Another theme to consider in 2022 is the upcoming transition of Ethereum’s’ protocol 2.0 ‘which will see the Ethereum mining process shift from the energy-intensive’ word proof ‘methodology to the’ proof of stake ”much more energy efficient. . Once the transition to ‘proof of stake’ is complete, the energy consumption of Ethereum mining is expected to drop by around 99%, which should dramatically improve the attractiveness of cryptocurrency to investors. ESG.
Of course, institutional adoption was a major theme for 2022, with bitcoin suffering as investors (including Tesla CEO Elon Musk) soured on the cryptocurrency after realizing its disrespectful nature. the environment. As bitcoin miners do their best to source power from renewables, Ethereum’s transition to “proof of stake” is a step further. So, in 2022, the ESG preference for ethereum could be another major driver of ETH’s outperformance over BTC.
As always, regulation is a big risk for the industry. In 2021, China took action to ban cryptocurrency mining given the country’s serious pollution problem, while India took action to ban the use of cryptocurrency altogether. But comments from SEC Chairman Gary Gensler suggest the United States is not currently considering a blanket crypto ban. Indeed, the US Treasury Department has even taken steps to update its financial market framework to cement the legality of cryptocurrencies in the banking industry.
According to WalletInvestor.com’s proprietary algorithm, Ethereum is expected to gain just under 70% in 2022, bringing it to nearly $ 7,000 by the end of the year. This would of course mark a significant slowdown in the pace of gains recorded in 2021.
BOOX Research is slightly more bullish on cryptocurrency; “We are bullish on ETH while recognizing that it will not be a higher straight… On the upside, a move above $ 5,000 may give way to a run towards $ 7,500 as the 2022 price target for ETH “.
This item was originally posted on FX Empire