Ethereum price surged Monday to $407.10, a record high, largely on the growing investment in cryptocurrency driven in large measure by bitcoin. Monday’s record high marked more than a 5,000 percent gain this year for Ethereum, which was trading at under $8.00 in January.
Posting close to a 14-point gain in the last 24 hours, Ethereum was closing in on bitcoin, which suffered nearly a 10-point drop in the last 24-hour period, according to coinmarketcap.com. By the end of the day Monday, Ethereum’s market cap was $36.447 billion, compared to $43.997 billion for bitcoin.
Ethereum’s long-term rise has followed bitcoin’s, which traded above $3,000 on Sunday, also a record.
Pavel Matveev, co-founder of Wirex, told CNBC the strong interest in bitcoin has boosted investor interest in alternative cryptocurrencies that are delivering better gains. The expansion of ICOs has also raised awareness of altcoins.
While bitcoin’s rise boosts altcoins, there is also fundamental demand for Ethereum, Matveev said, adding that bitcoin and Ethereum serve different needs. Ethereum supports smart contracts, which has attracted significant interest among financial institutions and other companies.
The Enterprise Ethereum Alliance formed to connect large enterprises to blockchain technology. The alliance includes Intel, JPMorgan, Microsoft, Toyota, Samsung, the Depository Trust & Clearing Corporation (DTCC), the San Francisco Stock Exchange and others.
Ethereum has also attracted significant investor interest, based on the variety of currencies used to purchase Ethers. More than 83% of Ether buying was purchased using bitcoin a year ago, according to CryptoCompare. As of last week, bitcoin only accounted for 32% of the buying. Fiat currencies like the U.S. dollar and the Korean won have contributed a growing portion.
Charles Hayter, CEO of CryptoCompare, said fiat options are fleshing out of the Ethereum ecosystem, showing its broad appeal.
Ethereum’s transaction volumes reached 50% of bitcoin’s in late May for the first time, suggesting Ethereum is being widely used.
Google searches for Ethereum reached an all-time high in early May.
Ethereum also made history recently by becoming the most secure public blockchain out of all in existence, overcoming bitcoin for the first time ever since its inception, as measured by what is called a Köppelmann Constant.
Some countries appear to be using ETH as a hedge against national currencies. Switzerland, where the Ethereum Foundation is based, showed the strongest interest, followed by Venezuela, which is suffering triple-digit inflation.
South Korea seems to have fallen in love with the currency. Its three largest exchanges handle twice the ETH/fiat volume of Coinbase’s GDAX and Kraken combined. South Korea is also big into fantasy sports, an area where ETH’s smart contracts can be used to make the game more transparent and reduce cheating.
The government of Singapore recently conducted a test to digitize a national currency using the Ethereum blockchain.
Ethereum’s founder, Vitalik Buterin, recently met with Russian President Vladimir Putin, a high profile development that lends more credibility to Ethereum.
Nicola Duke, a Forex Analytix technical analyst, said breaking through the $377 price point was key for Ethereum. That price point, according to Duke, was the “resistance level,” the point that traders reach but don’t surpass. Ethereum’s next challenge is to reach $467. Duke uses historical price data to determine future price movements.
Ethereum has not yet experienced the price correction Duke predicted at the end of May. Matveev of Wirex said if Ethereum his $600 by year’s end, it would mark a 47 percent gain over Monday’s high.
While many factors are fueling Ethereum’s rise, much of the interest is based on the cryptocurrency’s ability to support smart contracts and enterprising applications.
Featured image from Shutterstock.
Last modified: March 4, 2021 4:57 PM