Why Ethereum Could Become the Most Popular Cryptocurrency in 2023? What Factors Are Influencing It?

Last week (9/18-9/24), various indicators of cryptocurrencies experienced volatile movements with similar magnitude, ultimately ending in a flat trend.

The total market capitalization increased from 1.04 trillion to 1.08 trillion USD but experienced a pullback on September 20th, currently standing at 1.05 trillion USD.

The market sentiment index continued to rise, reaching 46 on September 20th, which was the highest since September. It has now retraced to 45 due to sideways or downward movement in the market, indicating a possible further correction.

Cryptocurrency Market Cap (yellow) and Fear & Greed Index (blue) Trend from January 1st, 2023, to September 24th, 2023; Source: MacroMicro.

Currently, mainstream coins showed a phenomenon of two steps forward and one step backward, where they experienced a short-term pullback after an upward movement without erasing the previous gains. Last week, Chainlink (LINK) performed the best, with a 6% increase.

Bitcoin Cash (BCH) went from being the top performer to the worst, dropping by 6%, followed by Stellar (XLM) continuing its weakness with a 5% decline.

Performance of Mainstream Coins from September 18th to September 24th, 2023; Source: MacroMicro.

In addition, Bitcoin's price decreased by 2%, while its market share increased by 0.1%, currently at 49.2%. Ethereum's price dropped by 3%, with its market share declining by 0.5% to maintain 18.1%.

On September 22nd, a report ranking alternative cryptocurrencies to BTC based on global investor searches on Google revealed that Ethereum (ETH) had the highest search volume, reaching 3.26 million searches per month, followed by Dogecoin and Ripple with 1.66 million and 1.25 million searches, respectively.

Top Ten Cryptocurrencies (excluding BTC) in Google Search Volume; Source: Finextra.

Google, as one of the world's largest search engines, has a vast user base globally. The fact that Ethereum ranks first in search volume among all cryptocurrencies indicates that global investors have a high level of understanding about Ethereum since they need to know about it to enter relevant keywords for searching.

Regardless of the channel through which investors learn about Ethereum, their search behavior reflects a strong desire to deeply understand Ethereum, which is a necessary prerequisite for investing and purchasing. 

As a counterexample, if there is an unknown token in the market, would you buy it? The answer is no because you are not aware of its existence and have no understanding of its business.

Although cognitive understanding alone is not sufficient for actual investment, as it requires other facilitating conditions, particularly stimulated by bullish market trends, it already reflects the intense interest of global investors in Ethereum, which lays the foundation for future price increases of Ether. 

Simply put, once the conditions are ripe, such as a positive global economy or a favorable cryptocurrency market, Ether becomes an important target for investors to buy in large quantities.

Regarding the aforementioned ranking, you may wonder why recent hot tokens like Worldcoin (WLD), Pepe (PEPE), and CyberConnect (CYBER) are not seen. 

It should be noted that although these cryptocurrencies may experience astonishing price surges, skyrocketing trading volumes, and high speculative fervor during specific periods, they typically fade away quickly and cannot sustain their momentum. Once investor sentiment weakens, these projects quickly fall into oblivion and fail the test.

In contrast, the selected cryptocurrencies mentioned above possess important characteristics: a large market capitalization, a relatively early inception (enduring bearish market tests), and resistance to price manipulation. These are precisely the features that most investors value. However, what sets Ethereum apart from other currencies, securing its top rank?

In addition to the aforementioned significant features, Ethereum also possesses elements that are less common among other cryptocurrencies, such as a powerful ecosystem of applications, a highly esteemed founder, and high security.

Furthermore, Ethereum ranks second in terms of market capitalization and is often compared to the first-ranked Bitcoin, indirectly reinforcing investors' understanding and recognition of ETH. 

Another factor is that the price trend of ETH often aligns with BTC, meaning that ETH follows the ups and downs of BTC closely, resulting in a strong correlation between the two. This also helps investors understand it better.

ETH (red) and BTC (yellow) price trends over the past 10 years, source: MacroMicro.

On September 19th, BTC continued its rebound, reaching a high of $27,400, just near the previous resistance level.

On September 20th, Bitcoin attempted another breakthrough but was unsuccessful, experiencing a setback after being blocked. Since then, Bitcoin has been in a continuous decline, currently approaching $26,000, and the possibility of further decline is significant, with a potential return to the support level at $25,000 not excluded.

Bitcoin and Ether daily price chart, source: TradingView.

Following BTC, ETH initially rose but subsequently fell. It rebounded from $1,500 to $1,670 but has since experienced a continuous decline, currently priced at $1,570. From the above comparison chart, it can be seen that ETH's overall trend is weaker than BTC, mainly reflected in two aspects: smaller gains during uptrends and less resilience during downtrends. 

This also illustrates the principle of "the strong get stronger, and the weak remain weak." Therefore, when opening a position, one should pay attention to a technique: choose the stronger one for long positions and the weaker one for short positions.