The digital currency market in July 2021

There is an interesting picture emerging in the cryptocurrency market. For a start, Bitcoin’s market share dropped to 50% from 70% while Ethereum’s share rose to 15%. This means that the two leading currencies have the lion’s share of the market, something you maybe knew already. The question now is, can ETH take even more of Bitcoin’s share?

Recognizing key differences between the two is a good place to start to understand how each works and where they fit into the market. Bitcoin is being treated as ‘digital gold’ by investors because of its limited supply. Only 21 million BTC can be created and 18.5 million already exist. Moreover, BTC’s primary use is for payments.

ETH from Ethereum is a different beast. It has more commercial applications than BTC, and it doesn’t have a lifetime supply limit. Each year, up to 18 million new coins can be created. However, as ETH moves from PoW to PoS and tokens are burned, this will limit the number of ETH available by a considerable number.

FinTechZoom reports: “Though both digital assets have seen volatility lately, the difference between the two in their supply process suggests that volatility levels may not always be the same.”

Blu Putnam of the CME Group says, “When you have tight control of supply, that often leads to more price volatility. When demand shifts, and supply cannot respond, then the demand shift may be reflected in larger price swings compared to commodities.”

Transaction costs are another point to watch, and this is something that has dogged ETH this year, as gas fees rose to exorbitant amounts, making other smart contract blockchains, such as Cardano, look more attractive.

The costs of BTC transactions spiked three times in 2021 and have been again on the rise since May. When transaction fees rise, the price of BTC falls, sometimes by as much as 80% each time.

What’s next for the market? Putnam says “more complexity,” due to “all the choices of venues, from a variety of crypto exchanges, exchange traded funds (or ETFs), and futures on cryptocurrencies in both large institutional and small bite sizes.”

--

--

--

Creditum is the mobile application integrating regular cash with Crypto, Holding, Buying, Exchanging and Spending

Love podcasts or audiobooks? Learn on the go with our new app.

Recommended from Medium

Ballistic Freaks NFT ⚡ NFTbolt.io

Ballistic Freaks NFT ⚡

Thinkium is an all-around public blockchain network, which achieves unlimited scalability at a…

Know the power of Cashaa Wallet for Personal Users

Supporting local businesses is not a trend…it’s a lifestyle

Golff weekly project progress

Paxful Clone Script for creating a crypto exchange platform like Paxful

Paxful Clone Script

Yahoo Finance ClubRare Metaverse News

Why Bitcoin dominates the charts?

Get the Medium app

A button that says 'Download on the App Store', and if clicked it will lead you to the iOS App store
A button that says 'Get it on, Google Play', and if clicked it will lead you to the Google Play store
Creditum.io

Creditum.io

Creditum is the mobile application integrating regular cash with Crypto, Holding, Buying, Exchanging and Spending

More from Medium

Web3 Investments for 2022

Fundamental Analysis of Crypto:: Part-5

Explaining COINS and investing in the crypto world

Blockchain Technology: A Complete Guide to Blockchain Marketplaces.

header image | tedbree.com | Blockchain Technology: A Complete Guide to Blockchain Marketplaces.|