After bitcoin hit all-time highs, as appetite for digital assets continues to grow, ethereum prices also surged to record levels.
According to data from industry website Coinmarketcap, the cryptocurrency was trading at around $407.10 in early Monday morning trading. Since Jan. 1, when ethereum was trading at $7.98, this is a record level which marks a more than 5,001 percent rise in price.
Continuing its huge rally for the year, bitcoin traded above $3,000 for the first time on Sunday, and this rise in ethereum prices comes after that.
“The strong interest in bitcoin does boost investors’ appetite for alternative cryptocurrencies where superior gains are also being seen,” Pavel Matveev, co-founder of Wirex, a personal finance app that provides a cryptocurrency wallet and debit card, said.
“There is some correlation between cryptocurrencies in this sense but there is also fundamental demand for Ethereum in its own right. Ethereum and bitcoin aren’t directly competing as they serve different needs.”
The ethereum blockchain, which is the technology that underpins the digital coin forms the basis on which the cryptocurrency – with the name of ether runs. However, often used as shorthand for the digital currency as well is ethereum.
The design of ethereum is such that it is able to support so-called smart contact applications. Many investors are excited by a smart contract which is able to automatically execute the terms of a contract when certain conditions are met and is a computer program.
According to Coinmarketcap, below bitcoin’s $48.91 billion valuation, ether is the second-largest cryptocurrency by market capitalization, worth around $36 billion.
Supporting the price rise of ethereum is a number of developments in the ethereum community.
Aimed at linking large enterprises to technology vendors to work on blockchain projects, the formation of a group called the Enterprise Ethereum Alliance (EEA) is one important factor. Involved in this is are companies such as Microsoft and JPMorgan.
A new way for cryptocurrency start-ups to raise money is the so-called initial coin offerings (ICO) which has seen a surge. Signaling that the country might be looking to use the blockchain, giving it further legitimacy, Vitalik Buterin, founder of Ethereum, recently met with Russian President Vladimir Putin. Another driving factor is the detailing of a test carried out to digitalize a national currency using ethereum blockchain technology in a report released by Singapore’s government.
“Ethereum’s market message at the moment is that of the underdog to bitcoin with more potential. The complexity of the developing ethereum ecosystem is galvanizing adherents as well as displaying the functionality that it has to offer,” Charlie Hayter, CEO of industry website Cryptocompare, said.
Ethereum has pushed through $377, which is a key “resistance level”, Nicola Duke, a technical analyst at analysis platform Forex Analytix, said. This is a price that is not exceeded by traders but is reached by them. The next leg up in ethereum could see it reach $476 soon since now it has passed that $377 level. historical price activity to forecast future price movement is used by Duke who is a technical analyst.
(Adapted from CNBC)