Until recently, Bitcoin and Dogecoin have been the flag bearers for cryptocurrency market. Now the third one, Ethereum, is offering a whole new narrative to crypto investors as it has touched an all-time high. This is the first time Ethereum has crossed the $3000 dollar mark in the history of the coin, extending last week’s rally in the wake of a report that the European Investment Bank (EIB) could launch a digital bond sale on the ethereum blockchain network.
Ether is the digital currency or token that facilitates transactions on the Ethereum blockchain and it is the second-largest cryptocurrency by market cap behind Bitcoin. Interestingly, Ether has given more than 300 per cent returns since the start of this year, outpacing the more popular Bitcoin. The latter has grown by 95 per cent in the past four months.
As per the WazirX, the price of Ethereum rose up about 7 per cent from a 24-hour low price of $2847 to an all-time high price of $3110 time. Many crypto experts on Reddit believe that Ethereum is going to continue rising.
So why is Ether surging?
Crypto analysts believe the surge comes in the back of European Investment Bank announcement that it had issued 100 million Euros in 2-year notes using the Ethereum blockchain. Also, it gained amid speculation that the digital token is being accepted among mainstream financial entities including Mastercard, JPMorgan and UBS.
Experts also point to a broader awareness of ether’s smart contract platforms, which are powering the landscape for NFTs, Web 3.0 apps and decentralized finance (DeFi). In fact, the amount of capital locked in DeFi protocols just crossed $68B, which is up thousands of percent compared to the beginning of the year.
As DeFi becomes more popular, Ether stands to benefit greatly because most DeFi applications are built on top of the Ethereum platform.
Another reason attributed to such a price rise for Ether is the ‘rising institutional interest’. Amazon Web Services and Microsoft Azure are also using the Ethereum platform, reports said.
Moreover, non-fungible tokens, or NFTs, have been all the rage in 2021. These are the digital constructs that allow a piece of digital art to be sold as an original instead of an easily duplicated copy. Most NFTs are part of the Ethereum blockchain, which further lends credibility to and interest in the bitcoin competitor.
Ethereum has been adding many updates to its software and has plans to introduce ETH 2.0, which will make transactions faster, fees lower, etc. As Vikram Rangala, COO, says, “Ethereum has recently rolled out a bunch of upgrades, like sharding, staking, burning, and measures to lower transaction costs, also known as gas fees. Not all investors understand these technical terms fully, but these developments are boosting confidence that Ethereum is a powerful technology that is only getting more powerful. NFTs, DeFi (decentralized finance), and other applications are also in the mainstream news and even pop culture.
“Just as more people are learning that Bitcoin is not just a speculation bubble but a fundamental technology breakthrough, they’re learning the same about Ethereum. In the short term, we may well see a lot more price fluctuation, but long-term, there is serious underlying value,” he added.
Ethereum, launched in 2016 by Russian Vitalik Buterin, is the open-source blockchain software, is used to build contracts on the blockchain, and has recently been in the news a lot because of its use in the making and transferring of non-fungible tokens (NFTs) — digital collectibles that can be uniquely identified and held by individuals.
Reportedly, Buterin recently donated 100 ETH and 100 MKR, worth approximately $606,110 (roughly Rs. 4.5 crores), for use in COVID-19 relief in India. Australian cricketer Brett Lee, too, has donated 1 Bitcoin (roughly Rs. 40 lakhs) to the Crypto Relief Fund to help his “second home” India ensure oxygen supplies for hospitals and win the battle against the raging second wave of the COVID-19 pandemic. India has been recording close to 4 lakh COVID-19 cases daily that has stretched the country’s health infrastructure to its limits.