Bitcoin and Ethereum are performing well over the course of a month. But there is much more going on in the second row of the crypto market. With Cardano, Solana and Terra, three direct Ethereum competitors have either doubled or tripled at the same time. At the moment, it is mainly private investors that are driving up prices. But according to the crypto asset manager 21Shares, institutional and entrepreneurial players will soon turn to this trio. From Jürgen Büttner
The cryptocurrency market has been comparatively quiet in the past few days. This can be seen from the CMC Crypto 200 Index, which is made up of the 200 largest crypto currencies by market capitalization. Because this has been on the spot since August 20, 2021.
The balance for the month of August is still very good with an increase of around 26 percent. And this although the crypto heavyweight Bitcoin even had a somewhat slowing influence, as this only resulted in a monthly plus of a good 14 percent.
For crypto number two, Ethereum, things went better with an increase of almost 40 percent over the course of a month. But even that couldn’t keep up with the performance of some second-tier cryptocurrencies. Because Cardano increased by a good 113 percent, Solana by around 216 percent and Terra by around 176 percent. In the current cryptocurrency ranking, measured by market capitalization, this currently leads to places three, eight and twelve in the order mentioned. The trio recently set new price records.
Cardano price development over a 12-month period
Solana price development over a 12-month period
Terra price development over a 12-month period
Layer 1 blockchains
What is remarkable about this performance record is that, according to Swiss crypto asset manager 21Shares, Cardano, Solana and Terra have one thing in common – they are direct competitors of Ethereum. As it is explained, it is a Layer 1 category blockchains, as they fulfill two tasks – the processing of financial transactions within the blockchains and the hosting of decentralized applications (DApps). An exception is Cardano, which will only offer developers integrated app functionality from September 12, 2021.
The decisive factor is that these blockchains function as a payment processor (such as FedWire) and an app store (such as Apple’s AppStore and Google’s Google Play) at the same time. FedWire is a real-time billing system used by US federal banks. The App Store is a sales platform on which developers offer applications and make them available for download.
It is precisely in these two crucial areas of application that Cardano, Solana and Terra are striving to take a little market share from Ethereum. Even though Ethereum is (still) way ahead of its competitors, as 21Shares admits.
Capital inflows from institutional and corporate actors are likely to increase
As far as current market developments are concerned, the Swiss crypto ETP provider is of the opinion that, apart from Ethereum, the rise of layer 1 assets is primarily still driving small investors, as institutional investment products for layer 1 assets are currently only available via the Product range offered by 21Shares. (with the exception of Terra (LUNA), which is currently not offered by any issuer).
Furthermore, the Solana and Cardano ETPs from 21Shares together only represented around five percent of the managed investment funds. But this could soon change with increasing capital inflows from institutional and entrepreneurial players, according to the forecast. One example of this is Coinbase’s announcement that it is investing $ 500 million of its cash in a variety of crypto assets, which could make the listed trading platform for cryptocurrencies practically an index of these underlying assets.
Extremely strong performance values over a period of twelve months
It will be interesting to see how things will continue here. In terms of market capitalization, Ethereum still has a comfortable lead over the aforementioned challenges with a good 400 billion dollars. The market capitalization of the number three Cardano is significantly lower $ 89.3 billion, Solana is $ 31.1 billion and Terra is $ 12.7 billion.
But the race to catch up is underway – at least if you look at the performance over a year. Because Ethereum comes up with a very impressive increase of 758.68 percent, but the challenger trio dwarfs that. At Cardano, Solana and Terra the increases posted at the same time are 2,186 percent, 2,316 percent and 5,895 percent.
This is the stuff speculator dreams are made of and if this continues, the Ethereum lead could quickly melt away. There is also tension in this regard on the crypto market.
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