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The Price Development of Ethereum: Why the Sudden High?

The price of Ether on the Ethereum blockchain has been steadily and quietly increasing, reaching new highs in the previous weeks. The price of this world’s second-largest cryptocurrency is now worth over ten times the price it was when it bottomed during the COVID market panic of March 2020. This remarkable rise in price can be partly traced to the excess money flowing into all the leading cryptocurrencies, which are now seen as relatively safe store-of-value assets and a good speculative investment. 

Presently, Ether is changing hands at $4,140.95, representing a tremendous gain of about 460%. The price of the digital currency has even grown to outstrip that of the number one cryptocurrency, Bitcoin, which “only” had a seven-fold increase since March. Apart from the increased awareness about digital currency among the people, other factors that contributed to the amazing performance of Ether lately are the several improvements and new features being rolled out over the next few months. 

So what’s the buzz about this cryptocurrency, Ether, and why is it now worth more than corporate giants such as Starbucks and AstraZeneca?

What Is Ether?

Ether is the coin used on the Ethereum blockchain technology. It was launched in 2015 by a team led by Vitarik Buterin. The Ethereum blockchain is now popular for the ease by which software developers can write bespoke programs atop its network. These applications are sometimes referred to as smart contracts. 

Like Bitcoin, Ether is also a decentralized digital asset and uses distributed-ledger technology, blockchain, that records transactions immutably. The blockchain network is supported by a digital-mining community. Miners are the record-keepers on blockchains like Bitcoin and Ether, and they are rewarded with coins for their efforts. Each Ethereum transaction is confirmed and verified by these miners. 

Unlike Bitcoin blockchain that only enables digital, decentralized money (money that’s not issued from any central institution, say, dollars), the Ethereum blockchain can host decentralized applications as well as other digital tokens or coins. 

Why the Price Explosion of Ether?

Financial interest in Ethereum Ether tends to follow the wake of Bitcoin rallies. The token is the second-largest cryptocurrency, following only Bitcoin. Because of that, it quickly draws the attention of novice investors, hence contributing to its popularity and price increase. However, that is not the only reason for the price explosion of Ether – there are other factors behind the recent rally. 

The first factor contributing to the surge is the pace of innovation on the platform. Ethereum hosts most activities that happen in the crypto space. In 2020, we saw the emergence of decentralized finance (Defi). We can compare Defi to the mainstream financial world, but without the middleman banks. 

It is now easy for users to borrow, lend, trade, and invest through autonomous smart contracts through protocols like Aave, Compound, and Yearn Finance. This may sound like something impossible a few years back, but right now, it’s happening right before our eyes, and more than US$24 billion is locked into various Defi projects right now. With this development, users can now generate income on their cryptocurrency holdings, especially their Ether tokens. 

Another major factor contributing to the increase in the price of Ether is the launch of Ethereum 2.0. This is one upgrade that has caused a wave of positive change on the network. It addresses major concerns regarding the current version of Ethereum. In particular, it will reduce transaction fees, hence making it a right-on-time move, especially for Defi trading, where each transaction can attract lots of fees.

Ethereum 2.0 will also address the issue of environmentally wasteful mining, which is one thing many cryptocurrencies face, and not only Ethereum. Mining consumes a huge amount of energy, but with this version of Ethereum, the platform will be able to drop the need for vast industrial mining warehouses and conserve more energy that would have been wasted on mining. 

That means transactions will now be validated using a different system known as “proof-of-stake.” This will mean a whole difference for Ehtereum and perhaps given it an edge over Bitcoin.

A final factor that is driving the price of Ethereum up high is the launch of Ethereum futures trading on February 8. This means that for the first time, traders will be able to accurately predict what Ether will be worth at a given date in the future – this is a typical move of any mature financial asset. While analysts believe that the recent Bitcoin rally is being motivated by traditional investment firms, they believe the launch of Ethereum futures will produce the same price action. 

Ethereum Price Prediction: Will Ether Reach New Highs?

On April 6, the billionaire investor Mark Cuban said on a podcast that the price of Ethereum would likely continue to increase, especially with the new upgrade and application on Ethereum. He said the token would soon come pretty close to Bitcoin and that he now holds “a lot more” Ether than Bitcoin.

The chief strategy officer at CoinShares Meltem Demirrors on April 26 also told CNBC that the demand is fast shifting from BTC to ETH. During the last week of April, while Ether funds and investment products drew $34m, Bitcoin funds lost $21m. 

Raoul Pal, co-founder and CEO of Real Vision Group, also believes that ETH will continue to outperform in the coming months. He said according to expert predictions, the price of the digital currency is likely going to double by 2023. The Ethereum forecast from Digitalcoin is bullish and puts the average price at $4,813 in 2021, rising to $6,014 in 2022, and $10,406 in 2025. 

Is Ethereum A Good Investment?

This actually depends on your risk tolerance for trading highly volatile assets. That is what will tell if Ether is a good investment for your portfolio. However, from experts’ predictions, the price of Ether will likely continue to grow in 2021, which could make it a good investment for most traders.

How High Can Ethereum Go In 2021?

The price of Ether surprised everyone this year, and analysts believe if the price could manage to hold above the $3,000 level, the coin’s value is believed to have the potential to keep rising. 

Where to Invest In Ethereum?

Buying and investing in Ethereum is now very easy. With just a couple of clicks on most exchanges, you can buy your coin. But you can use a platform like Anycoin Direct when looking to buy your Ethereum. It is quick and very easy there – with just a few clicks, you are done!

In addition, the platform offers valuable information on Ethereum and other cryptocurrencies to help you achieve the best with your investments. 

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