While all the hype and media attention has focused on the remarkable upsurge in Bitcoin, the world’s largest digital asset by market cap, few are talking about Ether, the world’s second largest cryptocurrency in the world.
Up by about 15%, Bitcoin however is no match for Ether, which seems to be doing much better, up over 70% in 2021 so far, which is nearly double its price from the start of the year at about $750.
Ether recently hit a new milestone with an all-time high of over $1, 400 after 3 years since that milestone was broken.
According to experts, the rise in Bitcoin is helping turn the tide for Ether as price consolidation of Bitcoin results in money flows into Ether. This is seen in the rise of the asset when markets are similarly positive for Bitcoin.
Speaking about this digital asset correlation, Nischal Shetty, CEO, WazirX, India’s largest cryptocurrency exchange, said:
“Normally, when the bitcoin rally matures, altcoins such as ether catch up. This is because bitcoin investors start to diversify their holdings into other cryptocurrencies,.
Ripple—the third largest cryptocurrency—has seen a collapse due to a US SEC lawsuit, and hence Ripple investors are moving to Ethereum.
Also, the past year has seen the growth of decentralized exchanges and investors transacting through these exchanges pay transaction fees in ether.”
– CEO, WazirX
Speculations around the high price of Ether have also been linked to the launch of Ethereum 2.0 in December 2020, whch has so far seen over 3 million Eth, with a valuation of about $3.8 bilion, locked up, essentially removing them from the buyable supply.
The rapid development of Decentralized Finance (DeFi), of which Ether is the main underlying asset, has also seen a surge in all major tokens including Uniswap, Aave, Synthetix, MakerDAO, SushiSwap, and Curve. All of these DeFi tokens have outperformed both ETH and BTC in 2021 so far.
The amount of Ether transferred by smart contracts has also spiked in early 2021 and is approaching all-time highs set in mid-September 2020.
The fact that Ether is also relatively cheaper than Bitcoin also has a psychological pull factor as makes it seem more affordable. Owning a full Ether, for example, is much easier for many than owning a full Bitcoin.
With a marketcap of about $150 billion, Ether seems an alternative investible asset to Bitcoin and the current price jump in 2021 is proof of this.