Ethereum is Gaining Market Share: How Far Can It Go?

If we look at Bitcoin’s 72% market share at the beginning of last year, as compared with Ether’s 10%, the dominance of the original crypto currency was clear. In 2022, however, Ethereum’s upgrade to a proof-of-stake method of validating transactions has been eagerly awaited and has propped up its native coin, Ether, in very choppy crypto waters. Between June and September, Ether went up from a 16% market share to one of 20.5%, while Bitcoin’s portion diminished from 47.5% to 39.1%. In those months, Ether prices gained a considerable 65%, while Bitcoin was relatively stagnant. In an icy crypto market that looks set to select the most useful blockchains for survival and leave many of the others for dead, it’s possible Ethereum could, at some point, take over the number one spot from Bitcoin. Let’s take a closer look at Ethereum in general to see what some experts have to say about the future of the crypto sector. A must-read for those involved in crypto CFD trading. 

August

In August, traders’ minds revolved around inflation and the environment of high interest rates fostered by the Fed, and, as a result, risk assets lost their appeal. Both Ether and Bitcoin dipped down together with these assets. When Fed chief Jerome Powell spoke about future rate hikes at the meeting in Jackson Hole at the end of August, a crypto selloff ensued. Looking at the month as a whole, Bitcoin lost a hefty 14% to find itself at $20,049. Ether, for its part, was down 7%. Scaling back to the bigger picture of 2022 so far, though, Ether was down a massive 59%. In the bitterly cold economic conditions of the month, crypto lenders Celsius and Voyager Digital had to put a freeze on customer funds and file for bankruptcy. 

Looking at the decentralized finance and metaverse sectors, we see they took a battering, but Alkesh Shah of Bank of America was not so offput. He expected regulatory measures in the field “Over the next six to 12 months to provide a long-term tailwind for DeFi adoption”. In terms of institutional interest in crypto, there was some growth when asset manager BlackRock joined up with crypto exchange Coinbase to offer up crypto to institutions in a convenient form. Ethereum’s Merge was now imminent and expected between September 6th and September 15th. There were analysts who thought it could stimulate the crypto market in general, and some saw Ether’s price topping $2,000 by the end of the year if the changeover went well.

September

On September 15th, Ethereum co-founder Vitalik Buterin tweeted that the Merge had been successfully completed. Aside from lowering the blockchain’s power consumption by 99%, the move was also thought to be a draw point for institutions and developers. There are about 3,500 decentralized apps that find their natural habitat on the Ethereum blockchain; these include, for example, games and exchanges. The Merge was hoped to improve the speed and cost-effectiveness of the blockchain as well. However, it was no small task, rather it was “Akin to changing the foundation of a skyscraper while it remains standing!”, suggested Ethereum’s Harsh Rajat. One other thing it aimed at achieving was turning Ether into a security that brings back returns of about 5.2%. This development, together with a cutback in supply of the token, was designed to make it more appealing to traders. 

A week after the Merge, however, Ether was down 20%. “Price decline is all but inevitable”, explained Vid Gradisar of NewsCrypto.io, “right around the time of an event as important as the Merge”. He felt bullish that “Over the long term… the net result will be outperformance for ETH, in spite of the lower timeframe price action”. 

Peeking Ahead

Buterin has not finished yet. In July, he said the Merge would only make Ethereum 55% complete. The next upgrade – named Shanghai and anticipated within one year – will aim to take efficiency and scalability to a new level. A process called sharding will be used to run transactions in parallel and “Make the network more equipped to address new use cases”, says Matthijs de Vries of AllianceBlock. Shanghai may also facilitate the withdrawal of staked Ether. There are other features that developers want to add too – like the alteration of the way blocks are added to the network’s chain – but adding too many new features at one time could put off the date of finalization. 

From the perspective of the Ethereum user, the Merge did not produce any noticeable changes in terms of fees or network speed. Shanghai and the upgrades to follow it are supposed to do that. One immediate result of the changeover, however, was the overnight obsoleteness of Ether miners, who used to function to secure the network but are not needed anymore. Readers who are interested in CFD crypto trading will be keeping an eye out for any potential bugs or hacks that attach themselves to the upgraded network, as well as for any further institutional interest in the crypto sector, which may send prices reeling one way or the other. 

As for the future of Ether—will all these new measures secure a more prominent place in its trading future, or will Bitcoin continue to reign supreme? Only time will tell.