Technical analysts will always tell you that numbers don’t lie. It doesn’t matter if it’s how many passes a quarterback has completed in American Football, or trading volumes skyrocketing on financial markets, the numbers always tell a story.
This is especially telling in the financial industry and the cryptocurrency space. While there are plenty of charlatans that will try to pull unwitting investors into the space, those days may be numbered as Bitcoin and Ethereum further legitimize themselves in the eyes of the conventional financial world.
Bitcoin nears parity with Bank of America’s market cap
Late last week Cointelegraph astutely reported that Bitcoin’s market capitalization was close to equaling the market valuation of Bank of America.
The preeminent cryptocurrency has been threatening to go on an extended bullrun over the past seven days and its overall market cap is hovering around $216 bln according to the latest data from Coinmarketcap.
This makes the combined market value of Bitcoin just $10bln shy of Bank of America’s $226 bln market cap. It is an interesting measuring stick for the cryptocurrency, which has been getting a lot of positive attention from various market analysts.
The US Federal Reserve has looked to stimulate the American economy by printing money and that wanton issuance of new dollars has met heavy criticism by cryptocurrency proponents in particular.
Pantera Capital’s weekly newsletter highlighted how the Federal Reserve had minted more dollars in June 2020 than it had in the past 20 years. It’s bad for the Dollar but potentially good for cryptocurrencies, as many have mused.
Morgan Creek Digital co-founder Anthony Pompliano wrote extensively to this point earlier this week, saying the monetary policy in America would further drive the increasing amount of investment into assets like Gold, real estate and Bitcoin.
Mati Greenspan, founder of Quantum Economics, echoed these sentiments as he highlighted investment managers’ propensity to diversify holdings across different asset classes when the Federal Reserve printed money.
The direct correlation is that prices of ‘safe-haven’ assets like Gold and Silver rise as money is moved out of fiat currencies and into physical stocks.
Bitcoin and other digital assets are also enjoying the results of the Federal Reserve’s policies, although investors would do well to be cognizant of the inherent volatility of cryptocurrency trading.
Ethereum soars in July
While Bitcoin has been bolstered by its status as ‘digital gold’, Ethereum has also been enjoying immense success in 2020.
The proverbial little brother to Bitcoin, Ethereum has more than established itself as the blockchain of choice for decentralized application developers. Ethereum is currently the second biggest cryptocurrency by market cap and this has been solidified for a number of reasons this year.
Ethereum overtook Bitcoin as the blockchain with the high daily settlement value in July due to the boom of DeFi projects operating on the Ethereum blockchain. The tokens of various DeFi and DApp projects now account for nearly half the entire value of the Ethereum market cap.
The numbers prove that Ethereum is the platform of choice for DApp developers and this has also been helped by the number of stablecoins being operated on the blockchain as well.
Scalability is key
The only concern in the road ahead is the scalability of both of these blockchain behemoths. Second layer applications like the Lightning network will be key to Bitcoin’s continued success, while market conditions contribute to the amount of capital being poured into the cryptocurrency.
Ethereum’s future is dependent on how developers continue to work on its roadmap towards ETH 2.0, otherwise known as Serenity. The move towards a proof-of-stake consensus algorithm and sharding capability will be key to allowing the Ethereum blockchain to better handle the increasing number of projects running on the network.