Ether prices are now hovering around $ 3,400, up more than 330% this year. By comparison, Bitcoin prices have “only” increased 90%. In the past week alone, ether is up a whopping 30%, while bitcoin is flat. That has raised some concerns that ether has risen too far and too fast, much like bitcoin did in 2017, before falling spectacularly in 2018.
So why has ethereum, which now has a combined market value of about $ 400 billion for all of its coins in circulation, taken off lately?
“Why is there so much interest in ether right now? With the explosion of NFTs, people are seeing alternatives to bitcoin such as ether as a real utility. It’s not just a store of value, the digital gold that bitcoin is,” said John Wu. , president of Ava Labs, an ethereum-compliant blockchain company.
Wu added that ether is also getting a boost thanks to two other more technical developments.
Ether also just went through a hard fork – essentially an upgrade to the ethereum blockchain network that will help increase transaction speeds.
Ether, like bitcoin, is becoming mainstream
But the rise of aether goes beyond technical reasons.
He said that until recently, new cryptocurrency investors only cared about bitcoin. Then they started to take an interest in other cryptocurrencies, especially ethereum, as a way to diversify their holdings.
“Ethereum has now crossed the Rubicon into 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 that it is launching a bitcoin index, etheric index and cryptocurrency megacap index.
“Traditional financial markets and digital assets are no longer mutually exclusive,” said Peter Roffman, head of innovation and strategy at S&P Dow Jones Indices, in a release.
Investors may also flock to ethereum and other cryptocurrencies as growing concerns about inflation loom on the horizon as the global economy and US labor market warms.
Protect yourself from central banks that print more money
Ether is part of the so-called decentralized financing, or DeFi revolution that offers financial products that do not rely on central banks.
“With inflation on the rise, DeFi products on ethereum are the perfect way for people to combat the uncertainty caused by central bank printing of money and various supply shocks,” said Sergey Nazarov, Co-founder of Chainlink. an email to CNN Business.
That said, investors should probably be careful. The rise of Ether is so sharp and sudden that one cannot help but expect an eventual downturn like Bitcoin had in 2018, after experiencing a massive surge for the first time.
But Tally Greenberg, head of business development at Allnodes, a cryptocurency hosting provider, said she has no fear that ether will suffer the same fate.
“I’m not sure the ether will submerge that much,” she said. “Yes, the price can fluctuate. But ethereum may even have more potential than bitcoin.”