The ethereum price appears to have broken out of its prolonged slump, despite lingering concerns over a bug in a widely used wallet that has locked more than $150 million in user funds.
Ethereum — like most cryptocurrencies not named “bitcoin” — spent October on the sidelines as it watched the flagship cryptocurrency scale the charts, set new records, and gobble up larger and larger portions of the total digital currency market cap. Apparently tethered to the $300 mark, the ethereum price was unable to join bitcoin’s rally, and although it maintained the second-largest market cap by a considerable margin it was unable to prevent its market share from shrinking to levels it had not seen since April.
That might be changing. In the past week, the ethereum price has advanced by 12%, from $289 on November 2 to $326 on November 9. Ethereum now has a market cap of more than $31.1 billion.
Ethereum’s largest single market continues to be South Korea-based Bithumb, whose Korean won trading pair accounts for 15% of all ethereum trading volume. Unlike bitcoin, ethereum has fairly standardized pricing across the major exchanges; within the five highest-volume ethereum exchanges, the largest spread is eighty-seven cents.
The major driver for the ethereum price appears to be the cancellation of SegWit2x, the hard fork that was scheduled to activate on the Bitcoin blockchain next week. Although the fork threatened to plunge the network into a crisis, it presented bitcoin holders with the opportunity to receive “free” airdropped coins in the event of a blockchain split. Consequently, analysts believe that the looming fork was a partial contributor to the recent bitcoin price surge.
Although part of that increase represented new investments entering the market, a significant portion was capital that had previously been invested in other crypto assets, ethereum included. Now that SegWit2x had been called off, bitcoin has experienced a minor price decline, and the ethereum and altcoin markets have begun to see increased capital inflows. This likely explains the ethereum price’s recent advance.
However, investors must keep an eye on the fallout from the accidental activation of a bug in the smart contract governing Parity’s multi-signature ethereum wallet. The bug permanently locked the estimated $150 million to $300 million in user funds stored in these wallets and has raised questions about the usability of Solidity, the native programming language of Ethereum. Restoring the funds may require a hard fork that would be predictably contentious and threaten to create another Ethereum Classic-style blockchain split.
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Last modified: March 4, 2021 5:01 PM