Why is Ethereum set to explode?

By October 27, 20214 minute read
Why is Ethereum set to explode?

Despite other altcoins and stablecoins stealing the thunder from Ethereum, the largest altcoin still maintains the largest market share in the DeFi (Decentralized Finance) market.

Ethereum’s drastic and consistent growth over time comes to show the level of interaction on the network and somewhat explains the bullish narrative for the altcoin. But there are many reasons contributing to the upcoming explosion and bullish nature of Ethereum.

Why is Ethereum going to explode?

Here are 5 reasons:

Grayscale

Grayscale Investments is the world’s largest digital asset manager and currently holds around 3 million Ether and over 650,000 bitcoin, with a total of over $44 billion in digital assets under management between all of its funds.

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They give institutional investors different funds to invest in. They’ve got BAT (Basic Attention Token), Bitcoin, Bitcoin Cash, Chainlink, Decentraland, Ethereum, Ethereum Classic, Filecoin, Horizon, Litecoin, Livepeer, Stellar Lumens, and Zcash. 

Now Bitcoin is by far their biggest fund, but out of all the altcoins, which one do you think is the biggest? That’s right – It’s Ethereum. You can easily see on their website that Ethereum is winning by a long margin when it comes to institutions. 

Cathie Wood & Ark Invest

For a long time, Cathie Wood was only interested in Bitcoin; however, it’s now starting to change. Also, it’s important to note that it’s not just Cathie Wood who has chosen Ethereum; rather, it’s the whole team at Ark Invest. 

Ark Invest has a large team of analysts whose job is to look at protocols, markets, companies and their updates. There are hundreds of protocols to choose from and a handful of good layer 1 protocols, but which one have they actually bought? – Ethereum.

A few weeks ago, Cathie Wood stated that Ether has seen an explosion in developer activities thanks to NFTs and DeFi and that she is fascinated by DeFi, which, for all intents and purposes, is collapsing the cost of the infrastructure of the financial services industry, which the traditional financial industry doesn’t appreciate right now.

She also added that the protocols do have to move from a Proof of Work to a Proof of Stake consensus mechanism, and the transition is underway and seems to be taking hold. She and the team at Ark Invest have boosted their confidence in Ether as they’ve seen the transition between the consensus mechanisms.

Settlements

Credit: Messari / CoinMetrics

The above-given chart shows how many transactions have been settled on Ethereum and is measured in billions of US Dollars. In 2017 it was just under $350 billion; in 2018, over $400 billion, around $280 billion in 2019, and in 2020 we saw over trillions of dollars worth of transactions. 

But look at just what happened between last year and this month, Ethereum has settled over $6 trillion in transactions, and if you could have just one chart showing Ehtereum’s true value and demand, this one would be it.

Partnerships

There exist many partnerships with Ethereum, but the following are just the ones that have happened in the last couple of weeks.

Ethereum 2.0

If all of these were not enough, we have the fact that there’s a new and improved version of Ethereum launching within three to six months. Now we all know the biggest issue people have with Ethereum is the high gas fees.

Well, with Ethereum 2.0, all of a sudden, this will be gone. The new version will bring between 10 to 100 times speed improvements and a low transaction cost. 

So, this will be the final piece of the puzzle for Ethereum, and the build-up and the upcoming launch of Ethereum 2.0 are going to be one of the biggest events in crypto history, and it’s going to be a brave investor who does not want to take part.

Summary

It’s incredibly difficult not to be bullish on Ethereum right now since the news and developments this year have been sensational. 

  • We had Grayscale, which has been the market leader when it comes to offering crypto to institutional investors, and their Ethereum trust is by far the largest altcoin fund. 
  • Ethereum is the altcoin of choice for institutional investors like Cathie Wood and the team of Ark Invest, and they could have chosen from a whole number of different layer 1’s, but they chose Ethereum. 
  • In the past year alone, Ethereum has settled over $6 trillion in transactions. The reason the gas fees are so high is that there is an immense amount of demand on the network.
  • In the last couple of weeks, recent partnerships with companies like TikTok, Visa, BitPay, and some banks have also contributed a lot to Ethereum’s rise in popularity and demand.
  • And we’re now beginning to build up arguably the biggest event in crypto history where Ethereum transits to Proof of Stake (PoS) consensus mechanism. Soon, high fees and slow transactions will become a thing of the past.

Disclaimer: Cryptocurrency is not a legal tender and is currently unregulated. Kindly ensure that you undertake sufficient risk assessment when trading cryptocurrencies as they are often subject to high price volatility. The information provided in this section doesn't represent any investment advice or WazirX's official position. WazirX reserves the right in its sole discretion to amend or change this blog post at any time and for any reasons without prior notice.
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