Ethereum is the world's second-largest cryptocurrency by market cap. It is a blockchain on which further applications can be built, including stablecoins. As these are used more often in traditional finance and e-commerce, this could cause Ethereum to rise in value. A quick look at an Ethereum chart also highlights its increasing stability compared to other cryptocurrencies. We discuss this in the text below.
Stablecoins and Ethereum
Ethereum's main advantage to the retail world is its ability to support stablecoins. A stablecoin is an asset that tends to have its value pegged to a global currency. As this currency rises or falls, so does the coin's value. Crucially, stablecoins can be represented on the Ethereum blockchain. They can be used for real estate, bonds, and equities, and thus, they have the potential to revolutionize e-commerce.
Stablecoins are already in operation. In Singapore alone, they have reached a market of $1 billion. The advantage is that they have added benefits from fiat currencies but do not have the inherent volatility of crypto. It is not only e-commerce businesses that want to use them either. A recent study showed that around 64% of consumers are interested in using them as payment methods.
There are several other advantages. Stablecoins allow for faster and more efficient transactions. While rival blockchains to Ethereum have offered cheaper and more rapid ways of doing this, Ethereum is rectifying this. It is also still the main blockchain and cryptocurrency after Bitcoin. This suggests that if stablecoins are widely adopted, then Ethereum is still the most likely place where this will happen in large amounts.
The Rise of Long-Term Holders
The previous year was characterized by long-term Ethereum holders. There are several reasons why this may have been, but stablecoin adoption is one factor that has buoyed confidence. While Bitcoin hit records and made headlines, those holding it long-term were paltry compared to those who had been stockpiling Ethereum. A look at an Ethereum chart will show what a stable year it has had compared to Bitcoin's volatility. According to posts on X, long-term holders moved from a 59% margin in January to 75% by the end of the year.
This was in contrast to those holding Bitcoin for the long term. In the same period, these investors went from a 70% to a 62% margin. This was defined as any individual who had held an asset for longer than a year. When an asset is held for a long period of time, it shows positive confidence. This has remained and should continue into the new year.
Part of this may have been due to the interest piqued in Bitcoin. With a new price high, many people will have cashed out. This caused a cooling down period that has seen others offload their assets. However, the desire to hold Ethereum long-term can be attributed to a range of factors. One of the main is possible regulatory oversight from the Commodity Futures Trading Commission, which could see it brought into line with traditional financial institutions, including the e-commerce field.
How Are Stablecoins Being Used in Practical Applications?
One of the stablecoin's biggest assets for global e-commerce is that it can reach places where traditional banking often struggles. Not all buyers or clients have access to stable banking infrastructure. If people are in emerging economies, such as Africa, Central America, and other regions where banking is sparse, stablecoins can assist.
They are also helping remedy some of the problems in the final few legs of the journey. When moving money to emerging regions, that last leg is often the most troublesome due to local currency. Many are more willing to accept a digital stablecoin than they are their own local currency, due to its more stable nature.
Major payment gateways such as Visa are now using stablecoins and plan on increasing their use. They have recently announced that stablecoins will be used as a settlement payment with more providers, such as WorldPay. It is doing this by pre-funding many of its clients.
Crucially, Ethereum's value is dependent on whether it can hold onto its place as the primary blockchain for stablecoin development once they are used. It is also worth noting that many of the world's most used stablecoins are already built on the Ethereum blockchain. Tether is the most used and is pegged to the US dollar. However, USD Coin, another widely used stablecoin, is also used on the blockchain. The cost of building on the blockchain will also determine if it manages to retain this long-term sentiment. Many rival blockchains are known to be much cheaper than Ethereum. Gas fees are also higher on Ethereum, though both of these issues are being rectified.
Conclusion
To summarize, Ethereum's price and its number of long-term investors will increase depending on several factors. The first is that it manages to hold its position as the main blockchain on which stablecoins are used and created. Secondly, it is that these stablecoins are adopted more in the use of E-commerce. Several factors point to the fact that it will. However, the world is a complex place, and nothing is certain.