While the meteoric rise in the price of Bitcoin has dominated headlines in recent weeks, the world’s second largest cryptocurrency is also enjoying a period of significant growth.
Overnight, the cryptocurrency of the Ethereum network (Ether/ETH) broke through the symbolic $1,000 threshold for the first time since 2018, with a rise of more than 20% in 24 hours. The currency was traded at a peak of $1,142, just shy of its all time high ($1,448) from three years ago.
In the last twelve months, the popular altcoin has enjoyed an even greater percentage rise than Bitcoin, registering a price increase close to 800%, versus the circa 300% gain achieved by its better known rival.
For the uninitiated, Ethereum is a public blockchain network similar to that which underpins Bitcoin, but with additional functionality that allows for the execution of agreements known as smart contracts and for the creation of decentralized applications.
The network has recently begun the transition to its second generation from, dubbed Ethereum 2.0, which will pave the way to more effective network maintenance and an all-important increase in transactions per second.
The cryptocurrency that fuels the Ethereum network, ETH, has never reached the heights of Bitcoin. However, the performance of ETH tends to map Bitcoin price movements relatively closely, as investors fearful of missing out seek a cheaper entry into the crypto market.
According to CryptoCompare, leading exchanges have registered an ETH trading volume of $19 billion in the past 24 hours, as compared to $16 billion in Bitcoin. Reserves of the cryptocurrency held by exchanges are also down 20% since May 2020, creating somewhat of a shortage in supply.
It is also expected that institutional investors will soon pile into Ethereum, as has been the case with Bitcoin in recent months. If this were to take place, adding further legitimacy to already-bullish sentiment, Ethereum could well drive beyond its 2018 peak.
As ever, though, caution is advised when considering an investment into cryptocurrencies such as Bitcoin or Ether. As investors found out the hard way in 2018, it’s possible this latest rise in value will be followed by a steep decline, wiping out billions of dollars in value.