Crypto investment firm Pantera Capital is predicting that Bitcoin will keep losing dominance as a large-cap crypto asset surges and absorbs a significant part of the market.
In a blog post, Pantera shines the spotlight on Ethereum, which the venture capital firm says will continue rising on the back of massive fundamental catalysts.
“The ratio of Ethereum’s market cap to Bitcoin’s market cap has doubled in the last year. We think this is the beginning of the market re-rating Ethereum for EIP 1559 and proof of stake. These two changes will lead to Ethereum being a deflationary asset where each block, negative Ethereum are issued. This means ETH will be a more deflationary asset than Bitcoin.”
In March, members of Ethereum’s All Core Developers have green lighted to package EIP 1559 for the London hard fork, which is set to happen in July. The update will overhaul Ethereum’s fee market as it will introduce a base fee, or a standard fee that will be the same for all users. The upgrade will also make Ethereum a deflationary asset as ETH transaction fees would either be burnt or deposited into a long-term mining pool.
Pantera is also looking at a nascent crypto sector that it says could push Ethereum to greater heights.
“Ethereum has a massive ecosystem of decentralized finance (DeFi) use cases with rapidly growing adoption. Combine these two dynamics and we think Ethereum will keep gaining market share relative to Bitcoin.”
Though Pantera Capital did not issue a price prediction for the second-largest cryptocurrency by market cap, the venture capital firm is reiterating the price target for Bitcoin it set last month.
“In our April 2020 investor letter, we did predict that the halving of Bitcoin supply would drive the price to $115,212 in August 2021. As we wrote last month, the market is on pace for that to happen.”
The flagship cryptocurrency would need to appreciate over 190% to hit Pantera’s price target. At the time of writing, Bitcoin is trading at $39,502, according to CoinMarketCap.
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