Ethereum is finally rising, up to almost $240 before stopping to think a bit about whether it really wants to jump to a new frontier.
Making this a 30% jump since 12th of May from $185 to now a moving price but around $235 at the time of writing.
May the 8th is when the tokenized bitcoin wBTC was added to MakerDAO’s DAI.
It’s not however until May 13th when we see a big jump in wbtc’s market cap. In the chart above that’s the biggest green candle after the huge red one.
Price then goes on to $220, but it retraces to find a local bottom on May 21st. Coincidentally, that’s precisely when wbtc’s market cap sees another big jump.
So the price then somewhat recovers, double tests the local bottom, and we’re off to wherever the astronaut is going later today.
The correlation is not perfect, as you’d expect, but there appears to have been some sort of correlation with the question of course being why might that be.
The answer maybe is because it gives ethereum access to the biggest crypto by far where market cap and arguably community is concerned. In addition it gives bitcoin access to the second biggest crypto market.
And thus we have some synergy through which new utility arises with both being the winner as you can’t have wbtc without btc.
Price is based on supply and demand of course, but demand is based on utility through which then speculation arises that makes the utility part more a random walk where price is concerned, but speculation also derives from utility.
So logically if you increase utility in a way that the market thinks you have actually done so, then you’re increasing demand, and the random walk speculation in generally one direction unless speculation just completely briefly detaches.
The utility here being the decentralized finance space where for example you can get a wbtc flashloan and do all sorts of pretty cool stuff which just are not possible in bitcoin.
But why not just use eth? Because as we have seen in the past couple of years where price is concerned and as far back as 2016 where the underlying tech is concerned in that eth changes difficulty by block instead of every two weeks as in bitcoin, btc and eth are similar but are clearly in some ways very different assets.
So making all this a bit complex because one can see a scenario where wbtc is more valuable, so increasing demand for bitcoin because it has to go to the ‘vault‘ to ‘transform’ into a token, with that token then needing eth to pay gas fees and the like so increasing demand for eth.
As bitcoin is a far bigger market currently, eth might appear to be a bigger winner but it is actually not very clear as bitcoin has been rising too, although in the last few days eth has been rising quite a bit more from its far behind position as bitcoin before hand was rising quite a bit more.
Yet logically eth is the bigger winner as if we have a new cool dapp for example, you’d expect eth’s incorporation to be a given while wbtc needs to be added. MakerDAO of course was eth only until this year.
However, if you are a BTC maxi there is nothing stoping you from using what from your perspective would be ‘dirty’ eth for just the very barest of functionalities to then limit the dapp to wbtc only in a way that denies eth access.
So you can make eth a second class citizen in its own network except where paying transaction fees are concerned because for eth to be incorporated in a dapp it needs the integrated weth conversion facility which is pretty much wbtc but for eth and in a native way in as far as you send the eth to a smart contract which gives you the tokenized weth, instead of to a defi consortium as for wbtc.
Meaning with far too little data as it stands we have to be satisfied with stating that both clearly benefit from this synergy of two of the biggest blockchains and assets.
So price is rising for both. Good. With the pandemic now over, and some early fire day ‘celebrations’ in some parts of USA – ya bad taste – we might as well enjoy the rise of these rockets with Elon Musk to hopefully delight us later today when in an historic moment the first astronaut from a private rocket is to go to space.
May the atoms be with those dreamers, both here on earth and up there, at the frontier.