The world’s second most valuable cryptocurrency has risen in price by more than 500 per cent in 2021, compared to a 96 per cent rise for BTC, and now has a market cap roughly half that of bitcoin’s.
One of the reasons for investors to place their faith in Ethereum (ether) over bitcoin is the utility that its underlying technology offers, a recent research note from JPMorgan claimed.
It has already played a leading role in the emerging industry of decentralised finance (DeFi), as well as a platform for non-fungible tokens (NFTs).
Bitcoin is instead mostly serves as either an everyday currency, such as in El Salvador, or a store of value similar to gold.
“The rise in bond yields and the eventual normalisation of monetary policy is putting downward pressure on bitcoin as a form of digital gold, the same way higher real yields have been putting downward pressure on traditional gold,” the JPMorgan report stated.
“With Ethereum deriving its value from its applications, ranging from DeFi to gaming to NFTs and stablecoins, it appears less susceptible than bitcoin to higher real yields.”
A recent survey from uk.investing.com found that 52 per cent of investors plan to invest in Ethereum in the remaining weeks of 2021, compared to 48 per cent who intend to buy bitcoin.
“Many crypto investors have turned more bullish on Ethereum over the past year thanks to its increased involvement in DeFi projects and NFTs,” said Jesse Cohen, a senior analyst at uk.investing.com.
“With the price still below the $5,000 level, many expect ETH to double in price in 2022. That said, bitcoin is showing no signs of slowing down with mainstream adoption likely to gain further momentum in the year ahead.”
Last month, Ethereum overtook the value of JPMorgan Chase for the first time and is currently the world’s 15th most valuable asset with a market cap of more than half a trillion dollars – $10bn more than JPMorgan’s.
Data from global assets aggregator CompaniesMarketCap shows that Ethereum is also ahead of payments giants Matercard, PayPal and Visa.