Crypto prices have been getting a lot of air time so far this year–and for good reason.
After all, Bitcoin has shown signs of stabilization above $30,000; at press time, BTC was pushing $35K. And Bitcoin’s good fortune has long coattails–crypto prices are up across above the board.
This, of course, includes Ether (ETH).
The Ethereum network has been the subject of some concern throughout the year. As the decentralized finance (DeFi) ecosystem has continued to grow, the strain on the Ethereum blockchain has also gotten more intense. Scalability issues and high gas fees have plagued the network–and while second-layer solutions are being developed to address these problems, none has taken hold.
Despite this, the Ethereum network has continued to grow–and the price of ETH along with it. At press time, ETH had spent the last 24 hours or so around $1,100. While ETH has not yet managed to push past its previous all-time high of roughly $1,400. This price point was achieved in January of 2018.
As the DeFi ecosystem continues to grow, the viability of Eth2 draws nearer, and Layer 2 solutions move closer to launch than ever, Ethereum could be poised to grow even more.
What exactly is driving the price of ETH up? And will the rally last?
How much of the ETH price rally can be attributed to Bitcoin’s price increas?
A number of analysts have said that a large portion of ETH’s recent rise is due to Bitcoin’s recent price action–which may or may not be sustainable for ETH in the long term.
“As bitcoin goes through a bull run, it drives more interest in crypto overall,” said William McCormick Communications Lead at cryptocurrency exchange OKCoin, to Finance Magnates.
“As bitcoin topped out around the $34k level, we saw rotation out of BTC during this period,” he said. In other words, traders exited their BTC holdings in favor of altcoins to try and gain higher returns.
McCormick pointed out that Ethereum’s market share surpassed 14.3% on Monday, while Bitcoin dominance simultaneously fell to 67.66%. At press time, BTC dominance had risen to 68.5% while ETH’s market share was at 13.62%.
Of course, it hasn’t all been about Bitcoin. Will McCormick pointed out that Ethereum’s currennt bull run seems to have begun with the mid-December announcement that ”the CME group (the world’s leading derivatives marketplace) announcing that it will release ETH futures in February of 2021,” three years after releasing their bitcoin futures products.
Maria Stankevich, Chief Business Development Officer at EXMO UK, explained to Finance Magnates that additionally, “a large number of Grayscale’s ETH investors via private placements received their shares the other day. So as, Joshua Frank stated, ‘ETH’s run the last few days might be in large part due to those institutions buying…