Nick Chong · 1 week ago · 2 min read · Insights via Grayscale Investments
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There’s no doubt that Ethereum is an integral piece of the crypto market, with the massive amount of Dapps and platforms being built upon its blockchain accounting for important infrastructure within the industry.
Ethereum’s importance has only increased in recent times alongside the growing Decentralized Finance (DeFi) trend that has swept through the industry, attracting billions of dollars from investors and users.
Now, one analyst is noting that he believes Ethereum has become Bitcoin’s backbone, with its immense value and functionality making it more important than ever to BTC’s success.
Ethereum sees rapid fundamental growth despite market turbulence
Ethereum, like all major cryptocurrencies, has been subjected to immense volatility in recent times, with most of this turbulence favoring sellers.
The crypto has declined significantly from its February highs of $290 and has now remained caught within the mid-$100 region as its bulls struggle to maintain the momentum catalyzed by its drop below $100 a few weeks ago.
In spite of this bearish price action, ETH is fundamentally strong, as there is still nearly $700 million locked in DeFi loans, with this number climbing from recent lows of under $500 million.
Furthermore, data from the research and analytics platform IntoTheBlock also shows an uptick in daily active addresses, which started climbing heavily in late-March in tandem with a decline in zero-balance addresses.
This on-chain data seems to indicate growing activity amongst active investors, which may signal that they are currently engaged in accumulation.
ETH’s immense functionality may make it an integral part of Bitcoin’s future
One popular cryptocurrency analyst on Twitter known as Bitcoin Jack recently mused an interesting possibility when it comes to Ethereum’s importance within the crypto ecosystem, noting that its functionality makes it a “backbone” for Bitcoin’s growth and success. Jack said:
“Unpopular opinion: ETH has become the backbone to BTC. The amount of value already captured in ETH and the functionality provided to the ecosystem is impossible to ignore. Stablecoins (and DeFi) are becoming more important than ever. Big money understands this.”
It is an absolute fact that the ecosystems that are growing around Ethereum are important to the entire crypto industry’s growth, and if the world does look at ETH’s adoption and utility as a signal for that which Bitcoin may soon see, it could ultimately help catalyze further growth and adoption for BTC.