According to a crypto expert, Ethereum has lots of growth potential but it is unlikely to be more valuable than Bitcoin for the foreseeable future.
- Ethereum is a force to reckon with in the decentralized economy
- It has the potential to hit $20k in the next 5 to 10 years.
- However, it is unlikely to surpass Bitcoin’s market cap by 2030
Ethereum (EHT) is the backbone of the fast-growing DeFi economy. It has become a decentralized worldwide computer for anyone who wants to build a smart contract without any centralized limitations. It has taken on a market much more expansive than Bitcoin (BTC).
Ethereum’s smart contract capabilities, coupled with its ERC-20 token standard have seen its usage outpace Bitcoin. In quarter one of 2021, Ethereum-based transactions stood at $840 billion. This was only second to stablecoins, whose transactions stood at $869 billion. Bitcoin transactions in the same period stood at $623 billion.
Ethereum’s value appreciation has been quite impressive too. Since it hit an all-time low of $0.43 on October 20th, 2015, Ethereum has recorded an ROI of 438,130.3%. By comparison, Bitcoin has returned an ROI of 46,540.3% since it hit its all-time low of $67.81 on June 6th, 2013.
Despite these gains, Ethereum still dwarfs Bitcoin by market capitalization. Ethereum’s market capitalization stands at $221,218,661,462. By comparison. Bitcoin has a market capitalization of $519,396,579,675. This means that Bitcoin’s market capitalization is more than double that of Ethereum.
Looking into the future, it is quite natural to wonder, could Ethereum’s market capitalization eventually catch up with Bitcoin or even beat it? Let’s look at these top two crypto giants in-depth to figure it out.
Ethereum Still Has Lots Of Growth Potential
Ethereum is pretty much at the center of DeFi. The top 100 DeFi platforms are based on the Ethereum blockchain, and the number keeps growing. This is quite evident in the amount of money locked up in DeFi.
When DeFi became a thing back in 2017, less than $100k was locked up in DeFi platforms. At the peak of the recent crypto rally, this amount stood at $89 billion. Despite this exclusive growth, DeFi is still in its infancy. There is a lot of room for DeFi growth that will play a role in Ethereum’s long-term value appreciation.
One of the key factors that will fuel this growth is that Ethereum is halfway through in solving its scalability issues. Ethereum is in the process of a transition from a Proof-of-Work network to Proof-of-Stake. It is expected that after the transition is complete, Ethereum will be in a position to handle more transactions faster and more cost-effectively. By default, this will drive up the number of DeFi projects building on the platform.
Then there is the fact that the number of applications for DeFi is pretty much limitless. Besides, disrupting traditional finance, DeFi could have a huge role to play in the gaming industry.
A research carried out in 2018 indicated that 82% of game developers and 62% of gamers were interested in digital assets that could be exchanged in the gaming ecosystem. This is a huge market for Ethereum, and a number of such games are coming up on the Ethereum blockchain. Axie Infinity is a decentralized game where tokens with real-world value are the key drivers to the game’s economy. As such games keep coming up, the value of the Ethereum blockchain will grow as well.
For context on how big of a deal this is, there are more than 2 billion gamers in the world today. Not only are they many, but they also spend quite a huge amount of money annually. Data indicates that gamers spend over $159 billion a year, and by 2025, this amount is expected to be upwards of $256 billion a year. If decentralized gaming takes root, a lot of this money could flow into the Ethereum ecosystem. That’s a big deal to the long-term value growth of Ethereum.
Another aspect of DeFi that is set to drive up the value of Ethereum is decentralized exchanges. DEXs are a key component of the DeFi economy, and Ethereum has a huge chunk of this market too. Uniswap, the number one decentralized exchange runs on the Ethereum blockchain, and its growth has been exceptional.
As more people move to DEXs due to the security they offer, the entire Ethereum ecosystem will record exponential growth. For context on how interest in DEXs is growing, internet searches for the Decentralized Exchange keywords have risen by over 4000% since 2016.
But Could Ethereum Become As Big As Bitcoin?
Bitcoin has returned an insane ROI since it was launched. For the last ten years, it has returned an average of 200% compound annual growth rate. If it continues with this trend, conservative estimates indicate that one Bitcoin could be worth over $1 million by the year 2030.
The value appreciation of Bitcoin in the next 10 years will be driven by two factors, namely: Adoption and scarcity.
In terms of adoption, Bitcoin will most likely stay ahead of the pack for many years to come. That’s because it has the first-mover advantage. So far, most people getting into crypto-only know about Bitcoin. It is also getting adopted by countries as legal tender, with El Salvador leading the way on this front.
As for scarcity, there are only 21 million Bitcoins that can ever be mined. The difficulty of bringing new ones into existence is also increasing continually. With Bitcoin’s ever-rising adoption chasing a limited number of coins, this will greatly impact its long-term value growth.
At $1 million dollars a coin, Bitcoin would have a market capitalization of between $18 trillion to $19 trillion when using a total supply of anywhere between 18 and 19 million. This is attainable for crypto that just recently came close to hitting $100k.
Applying the same metrics to Ethereum, if Ethereum were to hit a market capitalization of $19 trillion, it would have to be trading at about $116k per coin. This does not sound so realistic. Most projections place Ethereum at about $15k to $20k by the year 2030. This would give it a market capitalization of about $2.3 trillion. It’s an achievable target but far off from Bitcoin’s potential market cap.
Read Also: Will Ethereum Make Me Rich In Ten Years?
Going Beyond The Market Caps
Ethereum is more likely to be worth less than Bitcoin in 10 years. However, this does not, in any way, make it an inferior investment. Ethereum could outpace Bitcoin in gains in the short-term, as the number of Dapps building on it keep growing.
The last 6-years have shown that Ethereum’s ERC-20 standard gives it a lot of potential in the decentralized economy. This gives it as much leverage as Bitcoin gets from its scarcity. Its adoption will only get better in the next 10-years.
eToro – The Best Platform to Buy Ethereum
eToro have proven themselves trustworthy within the Crypto industry over many years – we recommend you try them out.
Virtual currencies are highly volatile. Your capital is at risk.