Months after blasting through the top-10 barrier, Bitcoin’s biggest alternative cryptocurrency Ethereum has now marched into the top-5 bracket comprising of the most valuable names in the financial services world. The second-largest cryptocurrency Ethereum, with a market cap of $403.84 billion – nearly half of Bitcoin’s $1 trillion value – is placed right after the market cap of Visa ($504.75 billion) and JPMorgan Chase ($478.49 billion) in the tally of the world’s largest financial services companies topped by Bitcoin, according to the data from CompaniesMarketCap.
“Ethereum has been always been popular among developers specifically because it has provided a platform through which people can create Dapps (Decentralised Apps) and Smart Contracts that enable further blockchain innovation. These innovations have helped spur the growth and creation of tokens and NFTs, and have helped decentralise finance,” Darshan Bathija, CEO of Singapore-headquartered crypto trading platform Vauld told The Outlooker Online. NFTs are non-fungible tokes that unlike cryptos cannot be traded for another identical token and are used to represent real-world objects such as a painting or a house etc.
Ethereum has exploded in the past 12 months. The price has increased over 16 times from $206 as of May 7, 2020, to $3,465 as of May 6, 2021, while the market cap has jumped over 17x from nearly $23 billion, according to data from CoinMarketCap. While cryptos cannot be compared to physical enterprises such as Visa, JPMorgan, etc., given that the former is a peer-to-peer software system while the latter is a for-profit business, Ethereum is theoretically the 25th largest asset globally by market cap, showed data from CompaniesMarketCap. The top assets in the list also included precious metals such as gold and silver, and ETFs, apart from public companies.
Also read: Elon Musk-supported Dogecoin’s price hits new all-time high after scorching past 50 cents mark
There are three main reasons Ethereum has been on a tear. First, the utility of Etherium as a global financial settlement layer has gone up significantly. There are now over $77 billion deployed in Etherium-based projects and the number is growing rapidly. This uptick started in June 2020 or what is now called the summer of DeFi and continues to grow. On top of this NFTs and other product innovation on top of Etherium are now starting to see large-scale adoption,” Edul Patel, CEO and Co-founder at automated crypto trading platform Mudrex told The Outlooker Online.
The other two reasons are bullish market sentiment as crypto has become the darling of institutional investors with over $14.4 billion flowing into crypto in the past 12 months, said Patel. A majority of this has been driven into Bitcoin and investors are looking to diversify in crypto. Hence Etherium and other coins have seen strong demand that is helping drive up and stabilize the price. Lastly, the major announcement in the past couple of weeks S&P, Grayscale, and others towards building and launching institutional focused funds, according to Patel is helping Etherium boom.
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