Ethereum has surged to record levels on Wednesday, rising to $4,850, as investors flocked to the digital token with its growing use cases such as smart contracts and non-fungible tokens (NFTs).
ETH, however, slipped 2.43 percent on Wednesday night to $4,612.39, as per Coindesk‘s real-time tracker.
Ethereum has soared 560 percent this year, as investors are staking that the coin will emerge as the core cryptocurrency for more NFTs and smart contracts, which allows decentralized finance (DeFi) apps.
DeFi, the blockchain-based alternative to traditional financial products, rely on these smart contracts, which are computer programs or transaction protocols that automatically execute, manage or document events as part of an agreement or contract. These replace brick and mortar intermediaries, such as brokerages, exchanges or banks in providing these instruments.
Experts see the DeFi wave emerging as the more prevalent mode of banking, boosting the value of Ethereum and other blockchains used in DeFi apps.
Ethereum Surge Narrows Market Cap Gap With Bitcoin
Ethereum’s surge has narrowed its market cap gap with the leading cryptocurrency, Bitcoin, which also hit record levels on Tuesday by reaching $68,530.34–though it dropped 3.38 percent on Wednesday night to $64,711.63, as per Coindesk.
Ethereum now has a total value of around $575 billion, which has climbed closer to Bitcoin’s overall worth of about $1.3 trillion. These tokens make up two-thirds of the entire $3 trillion cryptocurrency market, CNN Business noted.
Wealth management tech company Docuspace founder and president Michael Pinsker told CNN that he is seeing a “shift” in which Bitcoin is losing its share of the overall cryptocurrency market cap from the present 75 percent to 50 percent. Pinsker said he expects that share to “come down even further.”
As a result, traders continue to get hyped on Ethereum, with the coin amassing 22 percent of the entire trading volume on the Coinbase exchange, CNN Business further reported. Tribe Capital partner Jared Madfes also said that he expects Ethereum to overtake Bitcoin in the next decade, a milestone he called “flippening.”
Experts Warn About Investing in Meme Coins
However, the experts interviewed by CNN Business also cautioned investors about buying these cryptocurrencies, some of which they said might not have practical uses. They are referring to meme coins, such as Dogecoin and Shiba Inu, which have soared in value due to the hype they receive online, especially with big pushes from billionaires Elon Musk and Mark Cuban.
Investment firm Alto founder and CEO Eric Satz emphasized that a “roadkill” could possibly happen with the flurry of crypto assets in circulation. Saltz advised investors to “proceed with caution” and suggested that they maintain a portfolio that carries Bitcoin, Ethereum and Solana.
Crypto trading platform Paxful co-founder and CEO Ray Youssef, on the other hand, said investors should not buy Dogecoin, Shiba Inu, or other speculative cryptos due to an expected correction in the very near future.
Comparing Bitcoin and Ether to the meme coins is like differentiating “blue chips and penny stocks” in the stock exchange, Youssef added.
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