Ethereum has risen to new heights in the past 24 hours, reaching an all-time high of around $24. Up from around $16 in what appears to be a bull run over the past two days.
The currency has further reached a market cap of more than $2 billion, the highest ever achieved by any digital currency except for bitcoin, giving ethereum a more than 10% share of bitcoin’s market cap.
The rise began shortly after the surprise decision by the SEC to reject the bitcoin ETF, leading to a steep price fall of around $350 to then somewhat recover, now standing at just under $1,200.
At the same time, it appears traders started buying eth, suggesting the currency is being used as a hedge against bitcoin movements, just as bitcoin is being used as a hedge against monetary mismanagement.
This inverse correlation may indicate the market is not sure on the values of the two currencies in relation to each other, with bitcoin losses apparently leading to eth gains. Interestingly, bitcoin gains have led to eth gains too recently, showing a non-consistent correlation.
That is probably because ethereum has its own factors that affects its price beyond bitcoin’s movements. Specifically, the recent announcement of Enterprise Ethereum, a collaboration of many giant banks, tech companies and start-ups, seems to have turned the mood towards optimism.
Moreover, the now somewhat distant DAO memory may allow for consideration that it was handled quickly while the resolution to the exploitation of a DDoS attack during autumn may show the competence of the development team.
The air, therefore, seems bullish, but some are urging caution. Ethereum likes to apply Silicon Valley’s mantra of moving fast and breaking things. Development wise, as far as the protocol is concerned, the community is waiting for the implementation of Proof of Stake.
This is a re-organization of the way transactions are validated, moving responsibility from hardware based miners to coin holding stakers that only need a node and a certain amount of eth to join the process.
Its deployment, expected sometime this year, would be a milestone for ethereum, adding clarity on certain aspects, such as inflation rate and block times. However, things may, of course, go wrong temporarily as you can never be initially sure with code.
After that, the protocol is to have an even bigger re-organization, sharding. This is a method which allows nodes to validate only some transactions, rather than all transactions.
If successfully deployed, it may provide the currency with as good as unlimited scalability, as well as block times in two or three seconds, maintaining the network’s promise of as good as instant and nearly free payments.
After that, and at this point the timeframe would be maybe in 2020, the protocol might perhaps be set in stone, with small optimizations here and there, unless some clever person comes up with something new.
Until then, temporary set-backs should be expected. Things might be broken and then hopefully fixed, there may be losses just as gains. Diversification is the key according to common wisdom.
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Last modified: March 4, 2021 4:55 PM