Last week, we discussed the latest price dip and expectations for the future. This week, we’ll be taking another look at the factors which have driven down Ethereum’s price as well as the general market sentiment among analysts, institutions, and crypto founders.
“High Chance” Ethereum Will Surpass Bitcoin, says Leaked Goldman Sachs Document
In the short-term, the crypto markets have shed over $1.3 trillion as BTC, ETH, and other altcoins plummeted from all-time highs following a sustained bull market.
However, the fundamentals of Ethereum are stronger than ever before. In fact, analysts from Wall Street giant Goldman Sachs predict that Ethereum will overtake Bitcoin as the “dominant” store of value, calling ETH the “Amazon of information.”
Indeed, in an increasingly thriving crypto ecosystem where thousands of applications are now live and operational, the value of Ethereum is arguably far greater than that of Bitcoin in terms of functionality. Much of DeFi is built on Ethereum, and the DeFi space saw a firm transition over the last year from a fringe industry to one gathering mainstream attention and adoption.
“Given the importance of real uses in determining the store of value, ether has a high chance of overtaking bitcoin as a dominant store of value,” noted the leaked report.
MyEtherWallet CEO Kosala Hemachandra stated in a note to investors that “Bitcoin is simply a value token with no clear roadmap. Even with the price plunge, long-term development is unaffected and Ethereum is well on its way to market dominance over bitcoin.”
Musk Faces Scrutiny in Crypto Community
Elon Musk remains a topic of discussion in the crypto world after posting tweets recently which contributed to a major selloff in the markets.
The billionaire has been accused many times of manipulating the crypto markets by helping to pump the price of DOGE and other assets, and was also charged by the SEC for securities fraud in 2018. After months of support, Musk called Dogecoin a “hustle” earlier in May, resulting in a 30% drop in value, before declaring that he would not be selling DOGE.
After announcing that Tesla would accept Bitcoin as a method of payment and seeing the prices spike in response, Musk stated that he had changed his mind due to environmental concerns around Bitcoin, predictably resulting in a price decrease.
The resulting selloff has seen Bitcoin and Ethereum fall from their respective all-time highs by about 50% each. Musk has since posted tweets stating that Tesla does not intend to sell its existing Bitcoin holdings.
Surprisingly, the tech CEO appears to be learning the basics of cryptocurrency in real time, with an exasperated community looking on as he familiarized himself with L2 solutions like Bitcoin’s Lightning Network which mitigates many of the issues he claimed to be concerned with.
Musk has become perhaps the most market-moving influencer of the crypto markets, almost single-handedly crafting major price spikes and dips with his social media posts. Adding #bitcoin to his Twitter bio correlated directly with a 20% price increase in Bitcoin, while Tesla’s announcement of a $1.5 billion purchase added another 16% to BTC’s value.
While Musk is forbidden by court order from posting on Twitter about securities without regulatory supervision, he is free to post about crypto and, indeed, manipulating the unregulated crypto markets is not, as of yet, illegal.
Buterin Predicted Crypto Crash
Ethereum co-founder Vitalik Buterin informed CNN that he was unsurprised by the latest crypto crash, stating that cryptocurrencies are likely in a bubble. However, Buterin stated that the popping of these bubbles is “notoriously hard to predict.”
“It could have ended already,” Buterin said. “It could end months from now.”
Of course, it’s worth noting that price has increased consistently following the burst of each of the “bubbles” Buterin refers to. The Ethereum co-founder went on to praise the fundamental growth and progress seen lately in the space, saying “It feels like crypto is close to ready for the mainstream in a way that it wasn’t even four years ago. Crypto isn’t just a toy anymore.”
Network Progress and Fundamentals
While price is down, ETH miners saw a record-breaking month for revenue in May, bringing in $1.93 billion as of May 23. $922.46 million of that sum came from transaction fees.
Institutional interest has continued, with ARK Investments founder Cathie Wood reportedly bullish on both ETH and BTC.
Q1 filings show that ARK, which manages $50 billion in assets, secured 639,000 units of Grayscale Ethereum Trust (ETHE) last quarter along with 8.67 million shares in GBTC. The ETHE purchase is the largest institutional acquisition of the asset to date.
Ethereum is now just months away from slashing its carbon emissions, a transition that will likely give ETH more mainstream appeal to investors concerned about the environmental impact of the cryptocurrency.
Meanwhile, growth in DeFi has fluctuated due to the price drops in underlying assets, falling from $88 billion to $49 billion in TVL, the lowest level since March 31. However, USDC stablecoin mintage rose to $1 billion in a single day last week, with $18 billion worth of USDC now in circulation, indicating ongoing user activity despite price declines.
Coindesk’s Consensus event takes place today on May 24 until May 27. The virtual event will bring over 10,000 attendees together for a series of educational panels, workshops, keynotes, fire-side chats, and networking opportunities.
Bridgewater Associates founder Ray Dalio will be speaking at the event along with Dr. Lael Brainard, governor of the Federal Reserve System, ARK Investments founder Cathie Wood, and Former Treasury Secretary Lawrence H. Summers.
The AIBC Summit Manila takes place in Manila on May 27, also with 10,000+ delegates registered along with over 400 exhibitors and 1000 investors. The event will host a wide variety of talks, networking events, and workshops. Speakers include musician and entrepreneur Akon, crypto trader and influencer Tone Vays, Ivan on Tech host Ivan Liljeqvist, and more.