Ethereum is once again crashing after experiencing a massive hype-induced price recovery. After closing at over 400$, the popular cryptocurrency is once again struggling to stay above the 300$ support level.
There are many reasons for this. Some claim that the DeFi bubble is close to bursting. Others say that community trust is lost due to the repeatedly postponed switch to a POS consensus system (ETH 2.0). The market sentiment is slowly starting to show that the majority of people prefer to purchase bitcoins instead of waiting for ETH to reclaim its spot.
For that reason, in this article, we take a look at the markets as a whole, where Ethereum stands, and what this shift means for less popular cryptocurrencies.
Enter Ethereum in 2020
2020 has been an eventful year for the whole crypto market. While ethereum was trading in the low 200s during the early parts of the year, it dropped nearly to $100 in the pandemic-related market crash that occurred in March. Shortly after that, the cryptocurrency literally “rose from the ashes”, surpassing the $400 price points earlier this summer.
By all means, the popularity of DeFi has made Ethereum more important than the previous years. Most DeFi coins are currently built as ERC20 coins, which makes Ethereum their foundation. And with Uniswap recently airdropping thousands of dollars to each of its users, we could see the more such coins coming in the short term future.
However, there is one event we are still patiently waiting for. An event that could potentially make Ethereum reach its previous peak price - that is Ethereum 2.0.
As we previously mentioned, the event has been postponed many times, and the network’s developers are still trying to figure out the final details before taking it live. In fact, the POS switch has been in the plans for over 4 years now and is currently planned to be released before the end of this year.
However the year is coming to an end soon, and we have still not received a definite date for the update. As such, many die-hard Ethereum fans are slowly starting to lose their trust, and look into different opportunities of more promising alternatives, like DOT (Polkadot) for example.
The effect on the markets
Ethereum has been following the trend of the markets, similar to most cryptocurrencies. As the market consolidates to find a new local bottom, so does Ethereum, even though positive news seems to be coming from all over.
But don’t forget that we are currently cruising through a bull market, which started more than a year ago when Bitcoin finally hit its hard bottom of $3200 (Ethereum was worth nearly $50 at that point). Ever since then, we are experiencing a recovery, with many new promising projects entering the market.
By all means, we still expect Ethereum to slowly grow towards its old peak price and breaking through it at some point. But until that time can come, we will have to look at the new market players, and place out bets on new, upcoming profit opportunities.
Which coins could benefit from it?
So, which altcoins can rise as a result of the recent market drop, which took ETH close to $200? There are many options really, and some of them are directly linked to the progress of Ethereum over the past bear market. We will limit our choice to 4 coins and briefly talk about each one of them:
Opportunity #1 - Polkadot (DOT)
Polkadot was created by ex-Ethereum co-founder Gavin Woods, aiming to do for blockchains what Ethereum did for applications. The network allows everyone, even those with little technical knowledge, to create their own blockchain.
Taking from Ethereum’s reputation, and by constantly (and consistently) building up their offer - the team released Substratum 2.0 just a few days ago - the team managed to climb into the top 10 of the most popular cryptocurrencies in CoinMarketCap.
We’re excited to see what the next year will look like for Polkadot.
Opportunity #2 - Chainlink (LINK)
If you haven’t heard of Chainlink by now you must be living under a rock. LINK is a peer to peer oracle network that aims to bridge smart contracts with data from the real world.
Currently also in the top 10, the cryptocurrency was heavily over-hyped in the summer of 2020, growing rather fast from $1 all the way to $20 per coin. Ever since then, LINK has dropped to the $9-$10 area where it seems to be stable.
Opportunity #3 - Binance Coin (BNB)
Binance boarded the hype train by creating its very own Binance Chain to host new DeFi products. After seeing the positive response of the community to such high-risk products, and the growth of Ethereum over the past few months, the team launched its chain, which already has three Unique projects.
Users of the popular cryptocurrency exchange can trade the coins of these projects and “farm” them to earn a high amount of interest.
Opportunity #4 - Ethereum Classic (ETC)
Even though ETC suffered three 51% attacks within August, it has not lost community trust. In fact, the popular cryptocurrency and its parent company (ETC Labs) decided to partner up with Chainalysis to improve the project’s security and rebuild audience trust into the original version of Ethereum.
We believe that the coin will experience a growth in price as a result of that and are waiting to see how the market will act in the coming months.
Ethereum is certainly not out of the woods yet but we tend to think that this crash won’t last long. After all, the market is slowly building up momentum and we are seeing more and more projects (Dapps) getting built on Ethereum’s network.
This brief price drop may be the best opportunity that you have to stock up your moon bags and get ready for the eventual price growth of the second most popular cryptocurrency.