Ethereum Charges Past $3000 for an All-Time Record High
The price of Ethereum broke past $3000 for the first time on Monday as the cryptocurrency gained on its rival Bitcoin. After the latest rally, the coin’s value has quadrupled in 2021, and it seems demand for Ethereum continues to rise. As a sign of its increasing market acceptance, the value of Ethereum/Bitcoin (ETHBTC) has more than doubled since January.
Ethereum (ETHUSD) has made a significant comeback in the past 12 months. The crypto has risen to its current level from a value of less than $110 after the market crashed in March 2020. This peak dwarfs the rise in the more popular Bitcoin (BTCUSD) on a percentage basis, although both have set new price records several times during the last few months. Meanwhile, in contrast to Ethereum’s growth during April, Bitcoin has lost almost 25% of its value since it hit a new record high earlier in the month.
One reason for Ethereum’s success may be the technology behind the coin. Ethereum was built to provide additional utility in the blockchain system that was first introduced by Bitcoin. Instead of acting simply as a payment system or store of value, Ethereum can be used to power smart contracts that can work with multiple assets and applications. A major example is the recent mainstream rise of non-fungible tokens (NFTs), which allows artists to certify and sell digital artwork via the blockchain.
Currently, the market cap of the world’s second-most valuable digital asset stands at around $360 billion, or only about 30% of Bitcoin’s 1.1 trillion market cap. However, ETH’s lower cost also gives investors the opportunity to purchase whole coins, an achievement that grows increasingly harder with Bitcoin, as it is valued at about $58,000. Although trading on Ethereum has up until now been tied to the performance of Bitcoin, its recent successes may be the beginning of a new trend, where the two cryptocurrencies trade independently.
Will Bitcoin Become a Valid Institutional Asset?
While Ethereum is getting much of the cryptocurrency limelight, Bitcoin is still enjoying significant popularity including increasing institutional recognition. In its Q1 share earnings report, Tesla (TSLA) announced that it had sold $272 million in Bitcoin holdings as a test of market liquidity. Additionally, in March, Norwegian holding company Aker (AKER.OL) decided to put all of the treasury reserves of its latest investment entity, Seetee AS, into Bitcoin.
One reason for companies to turn to Bitcoin may be the crypto’s incredible growth, especially when compared to the Federal Reserve’s estimates of inflation in the near to mid-term. Chairman Jerome Powell noted that inflation is still below the target rate of 2%, and that the Fed would even allow inflation to go above that figure for a brief period of time. This could make Bitcoin more attractive as compared to the Dollar for investors looking to maintain reserve values.
While Ethereum has not yet been adopted as an institutional investment at the same rate as Bitcoin, it has still seen significant growth over the past year. Can it continue to compete successfully with Bitcoin for market reach?
