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2020 has been an impressive year for the Ethereum network and the price of Ether (ETH). In November, the Eth2 deposit contract was quietly launched and by the end of the month the contract had reached capacity with 524,288 Ether blocked.
When Black Thursday happened on March 12, almost all cryptocurrencies had their price crushed and Ether was not spared the carnage. After trading for as low as $ 86 on March 12, the price of ether has rallied to post a 322% year-to-date gain and altcoin has peaked in 2020 at 635. , $ 70 on December 1st.
Despite the praised accolades for Bitcoin as it hit a new all-time high today, the price of Ethereum has actually surpassed BTC in 2020.
Despite this stellar performance, Ether is still around 59% below its all-time high of 2018 at $ 1,431. Even with a price far below its all-time high, the top altcoin’s $ 67 billion market cap has overtaken automaker General Motors and CME Group.
It should be noted that these comparisons are questionable because listed companies have assets, liabilities, capital expenditures, sales, and employees. While the same cannot be said for Ether, traders will nonetheless compare the two.
Long-term investors tend to build multiple competitive scenarios, growth analyzes, and valuation multiples. During this time, traders will be primarily concerned with price and volume.
Apart from the differences between the two assets and the factors of their value, it should be noted that some of the new trading platforms offer cryptocurrencies and stocks simultaneously.
Mobile app-based brokers like E * Trade, RobinHood, and eToro have tens of millions of users, and like the effortless ramp these platforms offer, it will be easier for more users. investors to interact with digital assets.
How Ether compares to companies with a similar market capitalization
Colgate-Palmolive is a member of the S&P 500 Index and the company has a market capitalization of $ 73 billion. The company was founded in 1806 and reported net income of $ 2.7 billion in the past 12 months.
US Bancorp also has a market capitalization of $ 67 billion, is America’s fifth largest bank, and is also a member of the S&P 500. The company was founded in 1968 and also owns Elevon, a credit card processor.
Finally, with a market capitalization of $ 64 billion, CME Group owns the Chicago Mercantile Exchange, founded 172 years ago. Its net income has totaled $ 2.1 billion in the past 12 months, and the stock also includes the S&P 500 Index.
Although Ether shares a similarly sized market cap, it is nothing like the companies listed above. Cryptocurrency does not contain a balance sheet or income statement. Therefore, Ether behaves more like commodities like gold, oil, and Bitcoin. The chairman of the US Commodity Futures Trading Commission (CFTC) also expressed a similar view.
As the chart above clearly shows, there are hardly any similarities between Ether and listed companies. While these stocks trade an average of $ 283 million per day, the cryptocurrency exceeds $ 2 billion, according to data from Messari.
The same can be said of Ether’s volatility, the standard measure of average daily price swings. Cryptocurrencies tend to have much stronger movements, mainly because they are not dependent on sales or growth expectations.
While the 90-day annualized rate of Ether exceeds 80%, it stands at 20% for Colgate-Palmolive and 32% for CME. Meanwhile, US Bancorp is posting volatility of 47%, and while this is unusually high for most stocks, it is still a mile from levels seen among cryptocurrencies.
Growth companies gave Ether a race for the money
Not all companies are the same, and a few have been in competition with the Aether Running. For example, Zillow has been on the run with a market cap of $ 25 billion, as has Square, which is $ 94 billion.
Zillow and Square have both managed to double their revenue over the past two years and each have huge potential market share growth in their industry.
Unlike Ether, they bear the brunt of capital spending, marketing, and other growth concerns. Despite this, the two have managed to record gains of 220% over the past thirteen months.
Crypto and stocks are becoming less of a conversation about apples and oranges
It is a relatively fruitless exercise to imagine the potential market for Ether. Firstly, cryptocurrency penetration is minimal and recent studies show that only 7% of Americans have bought Bitcoin. Therefore, the percentage of those who effectively use the Ethereum ecosystem is much smaller.
Unlike listed companies, Ether is part of open source software. Thus, upgrades and new interconnections of systems are possible. While it is difficult to value the network’s ability to scale, today’s launch of Ethereum 2.0 genesis block could be seen as an example since the price of Ether has seen an impressive rally leading up to the bet. at the level.
To conclude, it’s fair to say that Ether has much higher potential than the vast majority of listed companies, but that doesn’t mean investors will ignore the assessment of its market capitalization relative to growth tech companies.
The views and opinions expressed herein are solely those of author and do not necessarily reflect the views of Cointelegraph. Every investment and trading move involves risk. You need to do your own research when making a decision.
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