The Altcoin Landscape: How Vulnerable is Ethereum’s Position?

Ethereum is in dire need of extensive upgrades...

Crypto 10

The Altcoin Landscape: How Vulnerable is Ethereum’s Position?

This article is a complement to our full 2020 Market Outlook report - please download the full report for more insight into our views for major markets this year, including bold predictions from the research team!

Since its launch in 2014, Ethereum has been the dominant altcoin and smart contract platform, but for the first time in half a decade, its ecosystem may be vulnerable to up-and-coming rivals.

As recent issues around scaling and network capacity have demonstrated, Ethereum is in dire need of extensive upgrades, a project that developers plan to roll out in stages over the next several years. In Ethereum creator Vitalik’s own words, “Ethereum 1.0 is a couple of people’s scrappy attempt to build the world computer; Ethereum 2.0 will actually be the world computer.” While we agree that the updates to improve Ethereum’s capacity and security are essential, every day spent plugging holes in the blockchain’s current iteration gives competitors like EOS, TRON, and Stellar an opportunity to gain ground on the smart contract leader.

Like Bitcoin, Ethereum has a devoted following and strong “first-mover advantage,” but if the much-needed updates to Ethereum 2.0 are further delayed, developers and investors alike may turn to its competitors. From a technical perspective, Ethereum is trading between 7-week (50-day) and 29-week (200-day) moving averages.

Source: TradingView, GAIN Capital. Note that this chart uses a logarithmic scale.

With the recent breakout above bearish channel resistance, bulls are growing more optimistic, but they’d ideally like to see a move back above $225 to turn the longer-term bias to the topside. Traders should also monitor the ETH/BTC ratio, which remains below its 29-week MA as of writing, suggesting that the longer-term trend continues to favor Bitcoin over Ethereum and other altcoins.


Join our live webinars for the latest analysis and trading ideas. Register now

GAIN Capital UK Limited (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.

No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

For further details see our full non-independent research disclaimer and quarterly summary.