Those new to crypto, such as the institutional investors recently buying into bitcoin’s “digital gold” narrative, might now be looking around for the next big thing.
With the long-anticipated arrival of the Ethereum 2.0 upgrade on Dec. 1, that could be the network’s native token, ether. But analysts say ether should be judged on its own merits and not as a bitcoin replacement.
“I’ve always thought this digital asset space is huge – and it’s not just bitcoin – because there are going to be different applications for different things,” Raoul Pal, CEO and co-founder of financial media group Real Vision, said in Real Vision’s documentary “Ethereum – An Investigation,” which was released on Nov. 30. “I think of the two [bitcoin and ether] as having a very nice combined asset allocation.”
For Pal, an early bitcoin investor, the rationale seems even more plausible these days: As bitcoin’s price hits a new all-time high, the number one cryptocurrency by market capitalization is now more expensive and thus potentially a riskier bet for new investors.
It can be expected investors are looking for a new opportunity in crypto at affordable prices. Given that ether is trading roughly 59% below its all-time high of $1,432.88, it is tempting to believe there’s a bargain to be had. What’s more, the Ethereum 2.0 upgrade to increase the network’s scalability, security and energy efficiency has generated a lot of hype.
However, at least for now, analysts and traders who spoke with CoinDesk don’t think ether will replace the FOMO over bitcoin.
“For institutional investors, they are buying BTC for the digital gold narrative,” Ryan Watkins, senior research analyst at Messari told CoinDesk. “ETH just isn’t in that conversation yet.”
Ether “benefits from spillover and likely has more conversation around it from crypto-natives,” Vishal Shah founder of derivatives exchange Alpha5 told CoinDesk. “For the uninitiated, [it is] hard to see how ...