Ethereum vs. Bitcoin: Can Ether Surpass Bitcoin’s Dominance in the Cryptocurrency Market? Report

Fidelity Digital Assets published a report titled “Q2 2023 Signals Report” on July 18, stating that the prospects of Ether (ETH) for the next 12 months and the long term are optimistic. Although Ether has experienced a 62% increase year-to-date, with its current value at $1,913, the investment firm’s positive outlook does not guarantee the continuation of the month-long upward trend.

Although Fidelity Digital Assets, an institutional investor, expresses a positive long-term perspective on the price of ETH, it is worth examining their analysis compared to network and market data to determine its accuracy.

In addition to the technical indicators, Fidelity’s optimistic projection for Ether is supported by several factors. These include the network’s higher burn rate compared to coin issuance, the increasing momentum of new addresses, and the expansion of the network validators.

As stated in the Fidelity report, the Merge in September 2022 led to a net decrease in the supply of over 700,000 Ether. Furthermore, the analysts highlight the significance of Glassnode data, which indicates a growing number of Ethereum addresses engaging in transactions for the first time, demonstrating positive network adoption.

Moreover, the report highlights a notable 15% rise in the quantity of active Ethereum validators during the second quarter. Furthermore, the Ethereum network is gaining momentum due to the increasing anticipation surrounding EIP-1153. This proposed update, known as the “transient storage opcode,” enhances the efficiency of smart contracts, lowers expenses, and strengthens the design of the Ethereum Virtual Machine

Particularly, this alteration holds significant value for decentralized exchanges (DEXs). DefiLlama data reveals that Ethereum’s dominance in the DEX market has decreased from 60% to 46% over the past six months.

Potential Reduction in Transaction Fees through the Dencun Upgrade

Moreover, an upcoming upgrade on the prominent decentralized exchange (DEX) Uniswap could be another positive catalyst for the Ethereum network. As outlined in a presentation during the Ethereum Community Conference on July 17, the forthcoming Uniswap v4 will enable users to create an extensive range of pools by utilizing programmable buttons (hooks), native ETH support, and a singleton contract that facilitates internal transactions before final balance settlements.

This upgrade can potentially enhance the functionality and flexibility of Uniswap, further benefiting the Ethereum eco. The announcement increased the probability of EIP-1153 being incorporated into the upcoming “Dencun” upgrade, which ed a response from Scott Lewis, the co-founder of Slingshot and DeFi Pulse.

If approved, implementing EIP-1153 will be crucial in helping the Ethereum network regain its lost market share attributed to high gas fees. The average transaction cost has remained above $4 for the past several months since February. As a result, Ethereum’s total value locked has decreased to its lowest point since April 2020, standing at 13.55 million ETH, according to DefiLlama data.

Additionally, there has been a decline in decentralized application (DApp) activity, as evident from DappRadar’s 30-day data on unique active wallets. Notably, Uniswap experienced a 28% decrease, 1inch Network declined by 14%, MetaMask Swap saw an 8% drop, and OpenSea witnessed a 5% decrease. In comparison, during the same period, BNB Smart Chain’s PancakeSwap recorded a 10% increase, while Uniswap users on Polygon grew by 8%.