Ethereum News: While the crypto markets remain the battleground of “bulls” and “bears”, they remain indecisive. However, according to one investor, the next few months could be very good for Ethereum (ETH).
After the optimistic news from El Salvador, crypto assets entered a recovery trend again today. Bitcoin (BTC) is still 43% down from its all-time high and the market sentiment appears to be bearish overall. According to CoinGecko, Ethereum did not perform that badly, with a 39% drop from its highest price to the current $2,580 level. Usually, the rest of the crypto market goes deeper than Bitcoin during these heavy pullbacks.
Public markets and seed investor Daniel Cheung shared some insights on the fundamentals of Ethereum and why he thinks it could outperform bitcoin in the coming months.
“ETH and ETH-DeFi will have an unprecedented run in the coming months: ETH could soon shake BTC based on strong fundamentals.”
Ethereum has bullish fundamentals
The first argument the investor makes is that Ethereum fundamentals have never been stronger compared to Bitcoin. This could result in the valuation gap narrowing as the ETH market cap increases. At its peak, the Ethereum market cap had reached $500 billion. To understand this better, it should be said that Bitcoin is the same as it was at the end of December 2020.
“As the value of ETH increases, this should be a rising tide scenario and DeFi will benefit the most as it is the fastest growing sub-sector in the ETH ecosystem.”
Ethereum is settling four times in gross volume, including stablecoins, than Bitcoin, driven by the parabolic rise of decentralized finance.
The investor added that the fundamentals of major loan protocols and return aggregator protocols on ETH are incredibly flexible during this volatile period. Ethereum also generates much more than bitcoin in terms of transaction fees, which are not so good for users but for network value. Transaction fees are currently reporting that Ethereum is generating more than 80% of Bitcoin with seven-day average fees.
The market is currently unable to price the benefits of the EIP-1559, which is expected to be released with the London update in July. While this will not directly reduce transaction fees when demand is high, it will have an impact on deflation as it burns.
Cheung’s final argument is that institutional investment has never been that big and it’s unlikely to slow down given the fundamentals above. At the time of this writing, ETH is up 2% in the last 24 hours and 2,540%, 900% higher than its price at this time last year. traded in dollars.