Bitcoin is the undisputed poster boy of the cryptocurrency world and it has been so for quite some time now. Both in terms of price per coin, which is close to $7000, and the market cap, which exceeds $100 billion, Bitcoin is far ahead of the No. 2 coin in the crypto world, which has been Ethereum for most of the time. Like the faithful servant following the master, ETH prices have generally tended to rise and fall along with the changes in the bitcoin prices. With ETH being the favored crypto for the ICOs as far as their backbone is concerned, there was no question of why it was the second most sought-after crypto.
Ethereum Fades for a Brief Period
But, of late, Ethereum has fallen a bit off favor as far as the investors and traders are concerned. Also, with the mining difficulty also increasing in an exponential manner, it has seen the prices begin to taper off. Also, the hard fork which the ETH industry underwent less than a month back could not be called a resounding success as yet as the stability of the network is still under question. This has led to a lot of pressure on the prices of ETH and has led to its market cap dropping over the last month or so from the highs of $36 billion which we had seen in September. We are now seeing its market cap is $32 billion as of this writing.
But over the last week or so, there have been some interesting developments in the crypto world. The first was the cancellation of the hard fork in the bitcoin network that was supposed to happen in the middle of November. The cancellation was a result of a lack of consensus among the developers in the bitcoin network and this led to a lot of uncertainty among traders and the miners as well. Markets dislike uncertainty and that is why we have seen many investors and miners shift away from the main bitcoin market in search of other cryptos which are more stable and where there is likely to be better consensus on how to grow and expand the network.
Rise of Bitcoin Cash
In this migration, the crypto that seems to have benefited the most is bitcoin cash. It was a coin that was born out of the hard fork in the bitcoin network in August and though it had been stable all along, it had not caught the imagination of the market as yet. Many investors were not fully aware of Bitcoin cash advantages and how to buy Bitcoin cash. Even until the end of October, it was trading only in the $300-$400 price range for most of the time and the market cap was slightly less than $7 billion only. This ensured that the bitcoin cash market stayed in the top 5 as far as market cap was concerned but it never came into the limelight till the cancellation of the fork.
Once the fork was canceled, it gained the attention of many bitcoin investors and miners as it proved to be an easy alternative for bitcoin. The networks were similar and the developers in the network were also from the main bitcoin network only and this gave rise to a lot of synergies. Also, the mining equipment that was needed for bitcoin cash was also similar to the one needed for bitcoin and this made the migration to this network pretty easily. This meant that some part of the demand for bitcoins were diverted to the bitcoin cash market which has since seen the rise of its prices from the $300-$400 regions to as high as $2400 in a matter of a couple of days. This also led to its market cap rising from below $7 billion to as high as $39 billion and for a couple of days, it overtook Ethreum as the second biggest cryptocurrency as far as the market cap was concerned.
Traders will Decide
The prices have since corrected since that time and the prices now trade in the $1300 range as of this writing but the battle between Bitcoin cash and Ethereum has well and truly begun. The ETH market has also found some love once again and this has helped the prices of ETH to rise again as well and as of this writing, Ethereum continues to hold on to the No. 2 position with a market cap of around $32 billion while bitcoin cash breathes down its neck with a market cap of $21 billion. With the prices of both beginning to stabilize and then becoming bullish again, it is going to be a real battle between the 2 markets in the short and medium term to decide who would be the heir to the bitcoin throne. ETH has the advantage of being in a stable network with a lot of backing from some very strong developers who believe in its superiority while bitcoin cash is built around the bitcoin network and has the advantage of being familiar to the bitcoin traders and miners.
There are not going to be any easy winners in this battle but as the prices and the market cap of each begin to move higher, it is only traders in these networks who are going to benefit from the increased liquidity and volatility in the coming weeks.
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