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The explosion in the price of Bitcoin and cryptocurrencies has increased the interest of Wall Street giants in digital assets.
Although Bitcoin is up around 300% in 12 months, this rally looks weak against Ethereum – the second largest cryptocurrency after Bitcoin in value – which is up around 800% in the same time frame.
In light of attempts to extrapolate the future of cryptocurrencies, Goldman Sachs analysts believe Ethereum has the ability to outperform Bitcoin in the years to come and have warned of high crypto price volatility. -currencies, which means that it cannot compete directly as a safe haven asset like gold.
“Ethereum currently looks like the cryptocurrency with the greatest potential for actual use, as it is the most popular development platform for smart contract applications,” Goldman Sachs analysts wrote in a note to customers, according to Forbes and Al Arabiya.net.
Ethereum has seen a wave of activity on its network over the past 12 months, due to the growing popularity of decentralized finance (DeFi) and non-fungible tokens (NFT), both of which are largely built on the Ethereum blockchain network. .
This year the idea of DeFi, the idea that traditional financial products can be recreated using crypto technology instead of banking, has become a multibillion dollar market, while NFTs, which represent all kinds. of assets and digital media on blockchains, have aroused the interest of artists, creators and sports stars.
Bitcoin is currently trading at $ 32,000 and its market cap is now around $ 600 billion, while Ethereum is trading at $ 2,100 and its market cap is $ 250 billion.
Meanwhile, Goldman analysts have warned that competition between Bitcoin, Ethereum, and the myriad of Ethereum competitors that have emerged in recent years is exacerbating volatility and preventing cryptocurrencies from becoming so-called ‘safe-haven’ assets as the ‘gold.
“Gold competes with cryptocurrencies just as much as it competes with other risky assets such as stocks and commodities,” the bank’s researchers wrote. “We see gold as a defensive hedge against inflation and cryptocurrencies as a risk factor for this hedge against inflation,” they added.
The recent sudden collapse in cryptocurrency prices has wiped out over $ 1 trillion in the market value of all currencies in the past few months.
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