Ether prices are now hovering around $ 3,400, which is over 330% profit this year. Bitcoin prices have increased by “only” 90% compared. In the last week alone, ether has increased by a staggering 30%, while bitcoins are equal. This has raised some fears that ether has risen too far, too fast, just as bitcoin did in 2017, before going down spectacularly in 201
So why did ethereum, which now has a total market value of about $ 400 billion for all its coins in circulation, take off recently?
“Why is there so much interest in ether right now? With the NFT explosion, people are looking at alternatives to bitcoin like ether as a real utility. It’s not just a stock of value, digital gold, which is bitcoin,” said John Wu, president of Ava Labs. , compatible with ethereum blockchain company.
Wu added that the ether is also gaining momentum thanks to two other technical developments.
Ether has also just gone through a hard fork – essentially an upgrade of the ethereum blockchain network, which will help increase transaction speeds.
Ether, like bitcoins, runs at the base
But the rise of ether goes beyond technical reasons.
He said that until recently, new investors in cryptocurrency were only interested in bitcoin. Then they began to show interest in other cryptocurrencies, especially ethereum, as a way to diversify their holdings.
“Ethereum has already passed the Rubicon in the mainstream, and despite the difficulty of understanding it, investors of all kinds are finding reasons to add ETH to their portfolios,” Dorman wrote.
S&P Dow Jones Indices has also validated cryptocurrencies. The index provider behind the Dow and S&P 500 said on Tuesday it was releasing a bitcoin index, an ethereum index and a megacap cryptocurrency index.
“Traditional financial markets and digital assets are no longer mutually exclusive markets,” said Peter Roffman, global head of innovation and strategy at S&P Dow Jones Indices, in a press release.
Investors may also flock to ethereum, as well as other cryptocurrencies, as there are growing concerns about inflation looming on the horizon as the US global economy and labor market heat up.
Hedging against central banks printing more money
Ether is part of the so-called decentralized financing or DeFi revolution, which offers financial products that do not rely on central banks.
“As inflation rises, Ethereum’s DeFi products are the ideal way for people to combat the uncertainty created by the printing of money by the central bank and various supply shocks,” said Sergei Nazarov, co-founder of Chainlink, in an email to CNN Business.
All this said that investors probably need to be careful. The rise was so sharp and sudden that one cannot help but expect a possible retreat, similar to Bitcoin in 2018, after enjoying a massive jump for the first time.
But Tally Greenberg, head of business development at Allnodes, a cryptocurrency hosting provider, said she was not worried that the ether would suffer the same fate.
“I’m not sure the ether will sink that much,” she said. “Yes, its price can vary. But ethereum can have even more potential than bitcoin.”