Real Vision Chief Executive Raoul Pal has stated that he is confident that Ethereum will surpass Bitcoin to become the leading crypto in the market. Pal made these comments in an interview with The Stakeborg Talks.
According to Pal, at its current speed and growth, the Ethereum network looks set to outperform Bitcoin in the not-so-distant future.
BTC And ETH Prices Stagnant
Raoul Pal analyzed the markets in detail on Twitter and stated that data volumes for Bitcoin and Ethereum have been “stagnant since the run-up to 2022.” He stated that his statement holds true for Bitcoin more than Ethereum because the former has seen little growth during the year. According to Pal, Bitcoin’s growth can be attributed only to large investors and institutions joining the network.
Pal demonstrated through charts that these large investors and institutions had taken their profits in the first half of 2021, and very few of them have returned to the market.
Benefiting from Metcalfe’s Law
Pal stated that he believed BTC and ETH benefit from Metcalfe’s law. Metcalfe’s law states that any network’s value is proportional to the square number of nodes present in the network. In simpler terms, any network benefits from adoption, and these metrics reveal that adoption has been slow in 2021.
ETH Outperforming BTC
While BTC, ETH, and other cryptocurrencies had record rallies in 2021, Ethereum has outperformed BTC when you compare the performance of the two largest cryptocurrencies in the world. Ethereum has seen a growth of 500% on a year-to-year basis, compared to Bitcoin’s growth of 95% in the same period.
Talking about this in his Twitter analysis, Pal stated that due to the growth of DeFi and NFTs, ETH trading volumes have remained higher. This is also the reason why wallet addresses on the Ethereum network have seen a steady increase. However, he does note a stagnation in active addresses due to people branching out in other projects in the market.
“But with no net real new capital flowing into the space, attention moves to other chains which also have PoS but earlier network adoption, taking volumes away from both BTC and ETH.”
Due to a higher volume of ETH being burned, and ETH staking has also led to reduced supply, which has significantly increased demand. The burning of ETH, coupled with staking and a maintained volume, are leading factors that have contributed to Ethereum outperforming Bitcoin 4x in 2021.
Ethereum addresses have also shown a steady increase through 2021, reaching 71 million users. EIP-1559 has also contributed to added bullishness in the price of ETH.
Rising Popularity Of Layer 1 Solutions
ETH is not the only crypto that has significantly outperformed its peers. There are other Layer 1 solutions that are fast gaining popularity and have even outperformed Ethereu, with the rise of DeFi and NFT contributing hugely.
Solana, Terra Luna, Harmony, Avalanche, and others have had a hugely successful year, with their performance even dwarfing that of Ethereum. In fact, these solutions have eaten into Ethereum’s market share considerably.
