Since the launch, bitcoin has been the main driver of the market, but this situation may be changed due to the Ethereum hardfork.
Bitcoin has risen in price by 20% in a week, its price exceeded $42K. Experts have started talking about a new growth cycle, but they give different interpretations, what exactly pushes BTC up. One explanation is that miners moved equipment from China, where the authorities began to put pressure on the cryptocurrency market and resumed mining in other, more favorable jurisdictions.
Indeed, the network hash rate, that is, the difficulty indicator, has grown for the first time since May 2021, when plans were first announced to ban crypto trading and mining in China. If the miners really restored their activities, then according to analysts, this could contribute to a new cycle of growth, which could lead to the level of the all-time high at $64.8. Technical analysis gives a less optimistic forecast: growth in the near future to the level of $45K or $48K.
At the same time, analysts do not notice an important change that is taking place in the market just now. The second cryptocurrency is growing much faster and is becoming a real market driver.
Since July 21, when the market dropped to a local decline, Ethereum has grown by more than 50%, from $1,770 to $2,675. During the same time, bitcoin grew by 40%, from $29.8K to $42K. Meanwhile, the bitcoin market share Bitcoin Dominance does not fall and even slightly increases from 44% to 46%. However, the share of Ethereum is also growing, from 17% to almost 19%.
Previously, the growth of Bitcoin Dominance was always accompanied by a fall in the share of ETH. In practice, this means that Ethereum really rules the market and controls the rates of other altcoins. This past weekend there was even a surge in the market shares of ETH and BTC and a drop in altcoins. On August 1, Bitcoin Dominance reached 51.15%, the share of ETH was almost 20%.
This situation reflects the growing importance of Ethereum to the market on the eve of the London hardfork, which will be launched on 4 August. London partially solves the problem of high fees on the Ethereum network. In mid-May, fees reached $60, this caused an outflow of DeFi projects and popular NFTs to other platforms and a decrease in ETH capitalization.
After a hard fork, this problem will be solved. In addition, a coin burning mechanism will be introduced, making ETH an inflation-protected asset. These changes have given rise to speculation that Ethereum may become a “bitcoin killer”.
It is hard to say that this will happen the next day after the London hardfork is launched. We could expect that Ethereum will surpass bitcoin in capitalization after the Ethereum 2.0 launching and when its blockchain will be changed to the Proof-of-Stake consensus. This will not happen until December 2021. But now, ETH is likely to rally to renew its all-time high, which is $4362 and was reached on 12 of May.