Although Bitcoin is the father of all cryptos, Ethereum has descendants of its own.
A whole crop of decentralized application blockchains—such as Cardano (ADA), NEM (XEM), and NEO (NEO)—have surfaced as rivals to their forefather, earning them the title of potential “Ethereum killers.”
How does this affect the ETH price?
Well, there’s no doubt that Ethereum investors should be wary of these upstarts. After all, many of them experienced enormous price growth in the last few months.
Cardano skyrocketed 2,163% in under three months. NEM and NEO, meanwhile, surged 343% and 284%, respectively.
Daily Ethereum Chart:
This suggests that investors are either: 1) hedging their bets on ETH or, 2) betting directly against ETH. Obviously, if these alternatives didn’t exist, some of those funds would have flown into ETH.
So yes, Ethereum killers are slowing ETH price growth.
But that doesn’t mean they will actually accomplish the momentous task of replacing Ethereum. The “Ethereum killer” moniker was just a glitzy name dreamed up by overzealous journalists.
It isn’t an actual prediction.
In fact, these currencies face an enormous obstacle in overcoming Ethereum. Namely, its first-mover advantage. Just take a look at the search traffic for Ethereum price relative to its competitors.
In more sophisticated markets, the popularity of search terms wouldn’t much alter asset prices, but cryptos are different. It matters how much investors are searching for them. (Source: “The price of bitcoin has a 91% correlation with Google searches for bitcoin,” Business Insider, September 19, 2017.)
In fact, measuring the level of interest in cryptos is one of the most quantitatively rigorous ways of analyzing them. Why? Because cryptos lack income or cash flows, rendering traditional DCF models useless.
Thus, popularity is the only metric we have available.
Analyst Take:
We believe that competition may dampen Ethereum’s growth prospects, but not by much. We maintain our $1,500 Ethereum price forecast for 2018.
Also Read: Ethereum Price Prediction for 2018
Source: Price Confidential