Over the last week, Ethereum has been one of the best performers among the top cryptocurrencies by market capitalization. Ethereum transaction counts have been on a tear, recently outpacing Bitcoin and XRP for the first time since July 2019. What’s the catalyst behind Ethereum transactions?
Ethereum Transaction Counts
Over the last year, XRP has been the market out-performer in terms of transaction counts. Since July 2019, it’s far outperformed both Bitcoin and Ethereum. As of recent, the narrative has shifted a bit. When looking at daily transaction counts since July 2019, Bitcoin has continued to reside well below Ethereum and XRP. More importantly, Ethereum just surpassed XRP in daily transaction counts for the first time since July 2019. The figure below further displays this data.
Ethereum Transaction Catalysts
The growth of stablecoins is a main driver behind ETH transaction growth. According to a recent report, the stablecoin market was valued around $9 billion in April 2020. With the market growth the last couple months, the stablecoin markets now surpass $10 billion levels. With the Ethereum blockchain being the driver behind stablecoins, it’s reaping the benefits in terms of transaction outputs.
Some of the more popular stablecoins being supported by the Ethereum blockchain include Tether, trueUSD, Paxos Standard, Gemini Dollar, USD Coin, Binance USD, and others.
The COVID-19 global pandemic has arguably fueled the demand for stablecoins. With the fears of the Federal Reserve injecting trillions into the financial system, investors have moved to less risky assets like cash. The problem with cash is the current interest rate environment. With rates at all-time lows, investors aren’t making money on their cash like they used to. The stablecoin market is offering a whole different vertical to earning interest. Outlets like Nexo Finance are offering high stablecoin interest that is hard to ignore, given the current environment. According to Nexo Finance’s website, they’re offering “8% interest and 100% asset back guarantee” on various stablecoins like USDT, TUSD, USDC, PAX, and others. There’s no doubt that the turmoil in traditional markets have fueled the evolution of stablecoins. From an interest rate and risk level perspective, parking assets in stablecoins has never made more sense…
Ethereum Price
As mentioned earlier, Ethereum has been one of the best performing digital assets over the last week. ETH has rallied nearly +7% the last week compared to Bitcoins +2.5% growth. Many investors are starting to understand the magnitude of utility behind Ethereum. In addition, investors are also looking forward to “ETH 2.0” which will essentially upgrade the blockchain from a proof of work consensus ( PoW ) to proof of stake ( PoS ). Aside from price action in the retail space, it was also reported by Visionary Financial that ETH is popular in the institutional space. Grayscale Investments, the largest asset manager in the digital asset markets is seeing increased interest from institutional investors. Aside from Bitcoin, the big players are betting big on Ethereum as well based on current allocation models. As Ethereum progresses closer to “ETH 2.0,” it will be interesting to see if price starts to become more uncorrelated to Bitcoin and more correlated to network utility.
Total Number of Ethereum Accounts
