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Does Ethereum really have a ‘high chance’ of overtaking Bitcoin?

On April 5 Bitcoin BTC/USD hit an all-time high of $63,052 and has since fallen around 40% to trade below the $38,000 mark on Monday. Ironically, the price of Ethereum ETH/USD is also down by roughly the same 40% from its all-time high of $4,128.

Should investors take advantage of the weakness and prioritize buying Etherehum over Bitcoin? Goldman Sachs analysts think so. In a leaked research note, the analysts said Ethereum has a “high chance” of overtaking Bitcoin as the dominant cryptocurrency.

The Wall Street research firm argues that Ethereum is the “Amazon of information” as it applauds its potential use case in the Decentralized Finance (DeFi) universe.

Let’s take a look and see if Goldman Sachs’ controversial call has some merit to it.

Getting up to speed: Ethereum’s use case

DeFi has recently soared in popularity, and this is a technology that takes advantage of cryptocurrency technology with the intention of recreating traditional financial services. For example, loans can be designed in a way in which it will no longer require a central authority (such as a traditional bank) and can rely on blockchain-based protocol instead. Given the fact that a huge chunk of these solutions run on the Ethereum blockchain, ETH has seen a huge surge in terms of usage throughout the year. 

One of the main technological advancements and trends that have used this tech are Non-Fungible Tokens (NFTs) which are issued on Ethereum’s blockchain with the intention of digitizing art, music, and other collectibles.

Next, you need to consider the new, long-awaited upgrade to Ethereum, which started at the end of 2020 and is designed to help Ethereum scale as well as reduce the expensive transaction costs that are currently proving to be a bottleneck for its use-cases.

On the other end of the spectrum, you have Bitcoin, which is essentially a value token without a clear roadmap. Sure, it receives an update here and there and has many forks that attempt to improve on it. But at the end of the day Bitcoin doesn’t match Ethereum’s pace of innovation. 

That being said, another point for Ethereum goes due to the fact that instead of just being another value token, it fuels all of the use cases that are built on top of the ETH blockchain. This includes DeFi, NFTs, and decentralized applications.

Should you buy BTC?

Bitcoin has been steadily falling in value, and many industry giants are concerned over its impact on the environment, as well as slow processing times of transactions. By default of being the first cryptocurrency to attract mainstream attention, it is crowned as the king of the crypto universe.

This alone may have been reason enough to buy Bitcoin in the past, it is not reason enough to buy BTC now. Given the fact that it is currently trading near $38,000 after recently flirting with the $30,000 mark, it is not a good time to invest in it. 

But since investors were eager to scoop up Bitcoin at the $30,000 mark this level might hold up again as a resistance level. If you can grab it at the $30,000 mark it could prove to be valuable when things get back on track, but without a clear roadmap for its evolution, this is speculation at best. 

As such, a tight stop-loss at around $28,000 should be set to cut losses early.

Should you buy ETH?

Ethereum on the other hand is at $2,406 which is far removed from it’s all time high and should be taken advantage of. Given the near-term volatility in the crypto market, perhaps you should buy half the amount of ETH today and the other half if it falls to $2,000.  

With its various technical advancements, and continuous upgrades, it is bound to raise its value at one point, and given the fact that, before the crash, it got to $4,128, it might very well be headed in that direction again, especially with the constant rise of DeFi.

The future of DeFi

Ethereum seems like it is going in the right direction, and through its ever-evolving blockchain, if it manages to scale better and mixes up its proof-of-work (PoW) consensus algorithm to a more eco-friendly option.

We can see ETH surge in value again and potentially, one day, overthrow Bitcoin as the leader. Will this happen in the near future? It’s doubtful but the possibility exists as more and more developers take advantage of it, and more real-world institutions allow ETH as a form of payment. 

Bottom line, the Goldman Sachs analysts are certainly on to something but since we only have access to small portions of the report via leaked documents, we don’t know what timeline Goldman Sachs is assigning to its call.

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