Ether (ETH) is upward 150% in 2021, causing its market place capitalization to soar in a higher place $200 billion. Most traders are fixated on the unitary price, even though it is entirely capricious, therefore missing relevant milestones and comparables.

Ether and Bitcoin YTD functioning. Source: Digital Assets Data

Investors, mainly those coming from the traditional industry, are used to compare multiples of earnings, sales, and market place share. Meanwhile, when valuing a cryptocurrency with multiple apply cases, in that location is no single metric to gauge its potential. Ether might simultaneously act as a digital store of value while operation every bit the token required to access the Ethereum network.

ETH market place cap, in USD billion. Source: TradingView

To evidentiate the myopia caused by unitary prices, Cardano (ADA) is priced below $1, although its market capitalization is over $26 billion. Therefore, the outstanding number of coins matters just as much. At the other extreme, Cover Protocol (COVER) unitary price is nearly USD 1,600, even though its market capitalization remains sub $100 million.

Largest global assets' ranking by marketplace capitalization. Source: 8marketcap.com

Although the merits of comparing dissimilar classes' avails side-by-side are debatable, marketplace capitalization works the same way for commodities, stocks and mutual funds. Some additional metrics are often used to analyze an asset size, including costless float, the quantity effectively bachelor for trading, also the average trading volume.

Co-ordinate to 8marketcap.com, Ether's market capitalization has recently surpassed those of Novartis ($NVS), AT&T ($T), and Cisco ($CSCO). Thus, it is but fair to brand general comparisons with those companies as investors might opt for one or another.

The Swiss-based Novartis International AG had its origins in 1857. With over 110,000 employees, the drugmaker posted an $eight.1 billion net income in 2020. Therefore, comparison a 165-twelvemonth visitor heavily dependent on research, production, and distribution with a technology-based protocol that doesn't even have servers or evolution teams seems absurd.

Moreover, companies run risks of additional shares being created, as opposed to Ether's fixed-supply calendar. Similar issues emerge on taxes, liabilities and potential government control. Decentralized protocols, yet, are more than insulated from such risks, thus justifying a much higher valuation.

Cisco Systems was ordered to pay $ane.9 billion in a patent infringement lawsuit in October. 2020. In Jan. 2021, AT&T was sued for at least $1.35 billion by a Seattle company. There are endless ways a shareholder might exist caught by surprise as 1 is heavily dependent on third parties.

To conclude, while information technology makes sense to compare various assets' market capitalizations, cryptocurrencies' purely technological nature provides a much broader upside.

The views and opinions expressed here are solely those of the autho r and do non necessarily reverberate the views of Cointelegraph. Every investment and trading move involves hazard. You should conduct your ain enquiry when making a decision.