Even though Ethereum is the second largest cryptocurrency by market capitalization, ETH continues to outperform BTC in terms of price growth.
Bitcoin struggles to maintain support at $ 21,000, while Ethereum has managed to bounce off the $ 1,300 level currently trading at $ 1,484. While Bitcoin has risen 2% in the past 24 hours, Ethereum’s price has seen a substantial 8% rise today, even with the uncertainty looming over the global and cryptocurrency markets.
Cryptocurrency market update
After falling below a $ 1 trillion market cap on Monday, the global cryptocurrency market is looking to rebound and is currently at $ 990 billion. One of today’s big engines is Ethereum, which has seen an impressive rebound from the $ 1300 level, which was unexpected by most traders.
While the 24-hour charts may look promising, the sharp drop in trading volume over the past 24 hours for Bitcoin and Ethereum suggests that the current market action – the rebound – is unconfirmed.
The reason for the volatile market conditions is the Fed’s imminent 75 basis point interest rate hike in its latest aggressive efforts to curb inflation.
After CPI data released on July 13 signaled that inflation continues to rise, the Fed has been preparing to raise interest rates to help the economy. Although initially there were rumors of a 100 basis point hike, the Fed will raise interest rates by 75 basis points today.
Opinions that the Fed’s interest rate hike will significantly affect cryptocurrency markets vary, with some stating that the price of bitcoin shouldn’t be affected much by rising interest rates. . On the other hand, the stock market is likely to increase its volatility, which could extend to the cryptocurrency markets as bitcoin appears to be following the price action of the stock market.
However, as Ethereum has dominated the market in recent weeks, we may not see much movement from Bitcoin even after interest rates hike.
Bitcoin price is likely to drop to the $ 20,000 level.
While bitcoin managed to hold the current $ 21,000 support relatively well thanks to Ethereum’s bullish price action, the crypto asset is likely to test the waters of the $ 20,000 zone over the course of the week, especially with the upcoming action. of the Fed.
Additionally, news of a SEC investigation into cryptocurrency exchange Coinbase is not helping the cryptocurrency markets, as the government agency’s latest action highlights the wild and unregulated nature of cryptocurrency exchanges. Many malicious actors attempt to defraud investors and exploit inside knowledge due to the anonymous nature of cryptocurrencies.
While cryptocurrency market regulation can curb the unfair actions of reasonable white-collar individuals, there will always be plenty of downright malicious actors out there trying to get their piece of the pie. No regulation or supervision will stop them from organizing scams, hacking wallets, and illegally obtaining cryptocurrencies.
Will Ethereum Overtake Bitcoin in Market Cap in 2022?
The question on everyone’s mind is whether Ethereum could outperform Bitcoin in terms of market capitalization by the end of 2022. With the Ethereum network merging scheduled for September, the cryptocurrency could show substantial growth in its price at the end of the third and fourth. quarter of this year.
As Ethereum’s market capitalization approaches 50% of that of Bitcoin, Ethereum’s price still needs to more than double to outperform Bitcoin. The best chance for ETH to outperform BTC is for the cryptocurrency to slowly outperform Bitcoin on a daily basis.
As the cryptocurrency market recovers and the Ethereum network moves from proof-of-work to proof-of-stake, we could see further bullish momentum for ETH that could push it higher. . The first step for ETH to outperform BTC in terms of market cap is to regularly trade at over 50% of Bitcoin’s market cap. Once this step is taken, the bulls could enter the Ethereum arena and continue to push ETHUSD higher.
Ethereum is more likely to show substantial price growth following the successful network merger in September and a network upgrade that will allow ETH to process higher orders of magnitude of transactions per second than it currently cannot. Until the Ethereum network proves its worth in the broader cryptocurrency market, ETH is unlikely to outperform BTC.
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