Twisting Alert – Why ERC-20’s can take over Ethereum market cap
Ethereum has been actively in news along with Bitcoin this year following its clear growth. This growth, however, was driven by the growing interest created among consumers through DeFi (Decentralized Finance) and the idea of using smart contracts to gain market positions. With a separate fundraiser, ERC-20 tokens also catch the eye and the opportunity to make a big profit. Serum Token [SRM], the ERC-20 Decentralized Finance token, has registered a 1500% increase in its value within 12 hours of being listed.
With the explosion of DeFi (Decentralized Finance) carrying more ERC-20 tokens at higher altitudes, the ERC-20 market cap has been surpassing that of Ethereum recently.
However, the ERC-20 currency has not changed much, recording steady growth, which could not be disrupted despite the long-term consolidation of ETH. The same reasons include not only the DeFi boom, but also the Yield Farming platform built over Ethereum.
When the market collapsed in March, this was the reason for it, DeFi tokens quickly recovered taking over the Ethereum market capitalization. This was the first of many things to happen this year. Since that Black Thursday, the cap on the Ethereum and ERC-20 market has been neck and neck. Data suggests that over the past six months, ERC-20 coins have ‘outnumbered’ Ethereum for 58 days, similarly, at the time of writing, only 1% under Ethereum’s market headline in the charts.
Moreover, the relation between the ETH and ERC-20 markets has always been very positive in the green space, a sign of two market holes moving in the same direction.
It should be noted, however, that this strong relationship has seen a general tremor, approximately 0.87, at the time of publication.
From the chart linked here, it can be assumed that the decline in relation was significant during the rise in Ethereum prices. This was seen in popularity in 2017 when the price of ETH gained and again in June 2020, when the price of ETH was consolidated. The next drop in the relation, especially in 2020, is why it would be a sign of DeFi’s breakout.
Therefore, it can be said that it is only a matter of time before the ERC-20 market capitalization takes over Ethereum, as the cryptocurrency has been hit by major trading pressure recently, bringing its price down to $375.