The price of Ethereum is taking off right now and I believe we are at the start of the next leg of this cryptocurrency rally.
Bitcoin has been maintaining its strong uptrend all week and this looks set to continue.
As I addressed in last week’s article, Ethereum has been dramatically underperforming of late but has some key fundamental factors coming into play soon that will have a very large impact on price.
Ethereum has been plagued by scaling issues – namely very high gas fees that mean processing Ethereum transactions is very expensive.
The two major updates coming to Ethereum over the next couple of months that will make Ethereum deflationary and reduce gas fees are likely to have a big upwards effect on the price as Ethereum bridges the gap between Ethereum 1.0 and Ethereum 2.0.
Bitcoin has been leading adoption in the crypto space since the start of this crazy bull run, and if you have been reading my articles ever since I started writing them then you will have witnessed how the space has changed over the past few months.
We have seen a lot of changes with the key one being the price of Bitcoin rising 300% in the time Ethereum has risen only 100%. Bitcoin is, of course, the first asset in crypto that most new investors enter into, but then there is a natural process of portfolio diversification and maturation.
New investors into Crypto are now going through a stage of portfolio maturation as they diversify from only Bitcoin into other Digital Assets like Ethereum and various other Altcoins.
Bitcoin’s market dominance is starting to slide again, it has held very steady around 62% since the middle of January but is starting to slip. When Bitcoin dominance slips this indicates that the market is starting to favour altcoins.
Pictured below is the Bitcoin dominance chart. When dominance breaks below 56% it is very highly likely we will see a very sudden growth spurt for everything that is not Bitcoin.
Having said all that, just because I expect altcoins to start making some serious moves upwards it does not necessarily mean Bitcoin will fall in price. Quite the contrary, in fact.
Bitcoin has become an institution-driven market. The retail sector is no longer in control. Goldman Sachs only just announced they are starting to offer Bitcoin to all of their clients and a Bitcoin ETF is all but guaranteed this year after the US Government admitted that they had dropped the ball on Bitcoin and should have institutionalised it a long time ago with an ETF.
A combination of this, high US dollar inflation, low government bond yields and excess money printing among many other factors make a perfect storm for Bitcoin. So, in theory, Bitcoin is still in a very good place right now.
Portfolio diversification from Bitcoin to altcoins will have a small downwards effect on the price of Bitcoin. However, the constant fundamentally bullish market that Bitcoin is in should mitigate all of this portfolio diversification and maintain a solid uptrend for Bitcoin.
It is likely, according to Mike Novogratz, that Bitcoin is on the path to being the size of gold’s market cap. Bitcoin makes a better store of value than gold and is much easier to transfer value between people, there are many people that claim that Bitcoin is not backed by anything but, recently, the chair of the Federal Reserve – Jerome Powell – came out and said that Bitcoin is a substitute for gold and Bitcoin is backed by people.
Bitcoin is a network of confidence just like any other stock or monetary system, they are all backed by people and confidence. Many people will say that is just not true, stocks have value because they are physical and to that I would say, stocks are valued by people, they are not reflective of a company’s real value, and a company only exists because of the confidence of the team working within it.
Bitcoin is valued in the same way anything else is valued – it all comes down to confidence.
In addition to all of that, Jay Clayton – former Chairman of the SEC – has got his first new job having left office. Surprise surprise he is giving advice to One River Asset Management – a $2.5billion Hedge fund on how best to play the cryptocurrency markets.
Despite what the governments around the world are doing to quell the growth of crypto, every time they leave office they first thing these major players do is provide crypto services. I don’t know if this is profit motivated or simply because they are passionate about the growth of crypto but it does send a very conflicting message that a man that spent the past five years telling everyone not to buy Bitcoin, is now providing advice to hedge funds on how to buy Bitcoin.
So, in conclusion, the market is looking more bullish than ever before. I am favouring the altcoin market over Bitcoin at the moment but both look very favourable.
If you want to stay up to date with the news throughout the course of the week then please do follow my YouTube channel linked below and have a great day!
TMG ‘That Martini Guy’ is a British Cryptocurrency Trader and YouTuber who publishes daily Bitcoin and crypto videos on YouTube. In the crypto space since 2013 he has vast experience in both cryptocurrency bull and bear markets having experienced nearly every single one in the history of Bitcoin!