First move: What’s next for Ethereum after the everyday hits of cryptocurrency?

Bitcoin (BTC), the largest crypto-currency, fell for a second consecutive day and pushed to the bottom of the range between $ 34,000 and $ 40,000, where prices have been trading for the past few weeks.

Ether (ETH), the second-largest cryptocurrency, retreated after rising to a new high of $ 1,439 on Tuesday. (Our Market Moves column below looks at the importance of this milestone. Also check out the latest issue of CoinDesk’s Valid Points newsletter by our colleagues Christine Kim and Will Foxley, which explores the ‘intrinsic value of ether’.)

The price disadvantage is’ somewhat disappointing, but also not entirely unexpected, given the focus elsewhere, especially the transfer of power in the US ‘,’ Denis Vinokourov, head of research at cryptocurrency chief broker Bequant.

In traditional markets, European stocks rose and U.S. futures showed a higher opening ahead of President-elect Joe Biden, which ended in Washington at 12 noon local time (17:00 UTC) in Washington on Wednesday. Gold strengthened 0.5% to $ 1,848.78 per ounce.

Just a month after bitcoin (BTC) eclipsed its old everyday high of the bull run three years ago, prices for the lesser-known but more versatile eater (ETH) set a new record on Tuesday: $ 1,439.33, based on CoinDesk pricing.

And just as the rapid rise of bitcoin spurred a new wave of high-price forecasts, analysts and investors in digital asset markets immediately began speculating about what’s next for ether, the original cryptocurrency of the Ethereum blockchain.

“Ethereum will soon move to the next level,” said trader and analyst Alex Kruger tweeted on Tuesday. The points to watch range from $ 1,500 to $ 2,750, he added.

The run already looks pretty impressive. Prices climbed almost sixfold last year and rose by another 90% in the first few weeks of 2021.

Ether is the second largest cryptocurrency by market value, becoming increasingly important compared to real-world analogues – including several major US banks that are at the heart of the traditional economy.

The price increase over the past few days has pushed the market value of all the existing eaters in the world to $ 160 billion. At that level, it is larger than the US financial beads Wells Fargo ($ 135 billion) and Citigroup ($ 132 billion) as well as the 86-year-old Wall Street investment bank Morgan Stanley ($ 137 billion).

Bitcoin’s market value is about $ 644 billion, for what it’s worth.

The logical justification for comparing the value with banks is that the Ethereum blockchain is the primary place for the development of ‘decentralized financing’. Known as DeFi, it is a sub-sector of the cryptocurrency industry where entrepreneurs use open-source software to build semi-automated versions of lending and trading platforms on top of blockchain networks. The theory is that they could one day replace or at least disrupt traditional financial ventures.

The comparison is not perfect, as Ethereum works as a network for businesses and developers rather than building itself. But the exercise does point to the ecosystem’s non-repulsive scale.

This is the key to the value of ether, as the cryptocurrency is often used as collateral within DeFi protocols, as well as paying fees for transactions over the Ethereum blockchain.

Collateral trapped in DeFi protocols has risen to nearly $ 25 billion, from about $ 700 million at the beginning of 2020, and even Brian Brooks, who stepped down as acting US currency manager last week, tweeted on Tuesday that DeFi may be “scary for some today, but necessary tomorrow, as some banks are starting to tell you what you can do with your own money and what not.”

According to industry driver DappRadar, approximately 45% of the 238 new decentralized applications in 2020 are designed to run on the Ethereum blockchain. The top 10 applications, known as Dapps, accounted for 87% of the blockchain transaction volumes, DappRadar wrote in a recent report.

“The development of DeFi has progressed rapidly,” blockchain analytics firm Coin Metrics wrote Tuesday. “Although institutions are probably not yet working on DeFi at this stage, there may be growing interest from traditional finance investors using the technology.”

The Ethereum ecosystem also has increasing resemblances to traditional fixed-income markets, especially now that the blockchain is transitioning to a ‘strike’ system, where new rules will reward investors with juicy returns to invest the capital needed to network security ensure. There is even a growing demand for bitcoin comparable to the Ethereum network, where the tokens can then be dumped into DeFi protocols in exchange for attractive interest rates.

And just as bitcoin has benefited from a spate of large institutional investors allocating money to the asset, a series of headlines about ether could attract new interest from professional executives.

Changpeng “CZ” Zhao, CEO of Binance, the world’s largest cryptocurrency exchange, wrote in a quarterly report this week that bitcoin works as a gateway for investors entering the digital asset ecosystem: ‘People enter via bitcoin and will eventually definitely investigate other things in the crypto-space, ”he wrote.

The Chicago-based futures exchange CME, which helped make cryptocurrencies more accessible to traditional investors when it launched bitcoin futures in late 2017, announced in December that it plans to launch ether futures next month.

“This gives an extensive base of institutional investors access to exposure to ETH,” Norwegian cryptocurrency analysis firm Arcane Research wrote in a weekly note to clients on Tuesday.

There are, of course, risks. Ether prices are even more volatile than those for the infamous volatile bitcoin. And in recent years, as DeFi activity has grown, the Ethereum network has suffered from congestion and increased transaction fees. According to DappRadar, Blockchain competitors have emerged to challenge Ethereum, including Polkadot, Cardano and Binance Smart Chain.

Nevertheless, Simon Peters, market analyst for trading platform eToro, said in an email on Tuesday that he was impressed with the network’s ability to offer decentralized streaming applications, web browsers, video games, shared computing services and digital art stores. In addition to DeFi.

“This abundant use has contributed to the price increase of Ethereum,” Peters wrote. “As more Dapps are built on the Ethereum blockchain, its usefulness increases.”

He said it was “very feasible” that ether could earn $ 2,500 this year, as it “benefits from the extensive crypto-asset we are currently seeing.”

In a sense, it’s just like bitcoin: a major use case for ether is speculation.

Investors’ sustained appetite for bitcoin was not enough to prevent the top cryptocurrency from falling by more than $ 2,600 on market value on Wednesday.

Bitcoin dropped from $ 36,000 to $ 34,000 early Wednesday (coordinated universal time or UTC) and according to CoinDesk 20’s data, it was last seen changing near $ 34,300, representing a 5% drop.

While the crypto-currency is down, it is still within a week-long reduced price range, as seen in the hourly price chart.

A move below the bottom of the triangle will expose support at $ 30,000. However, the chance seems stacked against a significant price drop as bitcoin investors remain uncomfortable by pushing the bull market and still increasing their stake. According to data provider Glassnode, the number of addresses containing at least 1,000 BTC has risen from 2,407 to a new high of 2,438 in the last seven days.

Meanwhile, the number of bitcoins locked up in accumulation addresses has risen by 30,000 in the past week to 2,739,166 BTC. Accumulation addresses are addresses that have at least two incoming ‘non-substance’ transfers and have never spent funds. Dust refers to insignificant small amounts of the digital asset.

Finally, Grayscale Bitcoin Trust (GBTC), the largest publicly traded crypto-investment trust, bought a total of 16,244 BTC ($ 607 million) on Monday, which sucked significantly more supply out of the market than miners added.

It remains to be seen whether sustained purchases from large investors will recover quickly.

Read more: Bitcoin falls 5% despite continued accumulation by investors

Binance Coin (BNB): Changpeng “CZ” Zhao, CEO of the exchange, writes in a quarterly report that the burning of 100 million characters could take five to eight years at a recently accelerated rate, instead of 27 years at the average rate over the past 3.5 years (Binance)

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Thai stock exchange trading in H2 token digital assets excludes cryptocurrencies (CoinDesk)

Nominated US Treasury nominee Janet Yellen says in confirmation that cryptocurrencies are a ‘concern’ in terrorist financing (CoinDesk)

“Difficulty in forecasting returns, lack of diversification and high volatility make it difficult to view bitcoin as a stand-alone asset in a diversified portfolio for long-term investors,” writes Barclays Private Bank chief market strategist. (international investment)

The Decheche Bank survey shows that investors see bitcoin at the top of the list of suspected asset bubbles, along with electric car maker Tesla, CNBC (CoinDesk) reports

Analysis of bitcoin yields during different trading hours seems to support the narrative that recent rallies have been driven by institutional investors trading in North America during the day, NYDIG analysis (NYDIG) shows

After 144 years, the London Metal Exchange proposes to close the trading ring (WSJ)

The founder of Chinese e-commerce Alibaba Group Holding, Jack Ma, reappears three months after disappearing (Nikkei Asia Review)

European commercial landlords stay afloat during pandemic thanks to robust central bank purchase of bonds packaged from loans to properties (WSJ)

“The stock market is driven by a combination of investors misinterpreting what the stock price means and a rush to buy junk,” writes columnist James Mackintosh (WSJ).

U.S. Treasury nominee Janet Yellen is using confirmation hearing to sue for yet another comprehensive package of economic aid, repressing Republican skepticism about the need for more deficit spending (WSJ).

Yellen can now advocate for the expansion of fiscal policy, but the balance sheet of the Federal Reserve did not expand much during her tenure, says Mati Greenspan of Quantum Economics: