Source: Inked Pixels – Shutterstock
- Binance recognizes Bitcoin dominance but predicts catalysts for the altcoins market after Ethereum 2.0 deployment.
- Investors will be incentivized to get rewards for staking their ETH resulting in a reduction of its supply.
Multiple reasons keep the market sentiment up. Despite the fact that the main cryptocurrencies have suffered losses on the last day. Bitcoin remains above $15,000, at the time of publication with gains close to 40% in the last month. On the other hand, Ethereum has started the first steps of Phase 0 of Eth2.
In the latest report from the Binance exchange, both cryptocurrencies are recognized for their performance and the potential to extend their rally beyond 2021. Bitcoin’s performance is attributed to its increased level of adoption and the positive news of PayPal’s crypto service which includes BTC, LTC, ETH, BCH. In that sense, Binance affirms that Bitcoin’s dominance in the market has caused losses in the main cryptocurrencies or small gains for the investors:
Large-cap cryptocurrencies such as ETH, XRP, BCH, LTC, and LINK delivered modest gains in October, but have failed to break new highs as trading activity shifted away to Bitcoin. For many months, altcoins have been the key driver of returns for crypto traders.
Thus, it is no surprise that altcoins have appeared to be losing steam and disharmonized from Bitcoin’s rally… Since the correction in early September, most DeFi tokens have displayed a complete turnaround, erasing 70-90% of their gains.
The report indicates that after passing the $15,000 mark, BTC is showing strong upward signals that could take it to a new all-time high. Despite this, they advise investors to consider a possible correction in the price in the short term while the first cryptocurrency by market cap “takes a breath” to reach $20,000.
Historically, Bitcoin would transit to a consolidation range or a short-term correction after a significant upward move; it appears to be the case in previous breakouts above $10,000 and $12,000.
Ethereum 2.0, catalyst for altcoins
However, the report indicates that the transition from Ethereum to Eth2 will be an important catalyst for the altcoins market. Predicting recovery in the altcoin market, Binance believes that investors will be encouraged to move their money out of Bitcoin and diversify their investments. The report concludes the following:
The upgrade is expected to have a positive impact on ETH as it will significantly boost the network’s compatibility, scalability, and security.
Additionally, the upgrade will shift Ethereum’s consensus mechanism to a Proof-Of-Stake, incentivizing investors to keep and lock-up their Ether for staking rewards. This will then reduce the supply of ETH tokens while demand continues to grow strong as large investors flood in seeking steady gains…
Considering these catalysts, the upgrade could drag out ETH from its recent slump and potentially inject more positive sentiment into the altcoin sector.
As reported by CNF, the deposit contract for the launch of the Ethereum 2.0 Beacon Chain has been launched. To continue to the next phase, investors are required to stake 524,288 ETH. The inventor of Ethereum, Vitalik Buterin, recently contributed with 3200 ETH.