Four reasons why cryptocurrency Ethereum has been on a bull run
- Bitcoin’s rally has almost matured, with a market capitalisation of over a trillion dollars and prices that have risen by over 200%.
- The 2020 rally for cryptocurrencies also brought institutional investors into the fold.
- The last reason is the simplest reason of all — the fact that even with its bull run Ether is cheaper than Bitcoin.
Bitcoin rally matured
The price of Bitcoin started going up early last year, as the pandemic drove stock markets down worldwide. Stock prices for companies started falling or behaving erratically, as pandemic-driven lockdowns started worldwide, and supply chains were hurt in almost every industry. As a result, many investors started taking interest in crypto currencies, with exchanges worldwide showing high growth in trading volumes since March last year.
While most of this interest went into Bitcoin — the best known and the largest
In short, Ethereum is today where Bitcoin was last year. With more money being put into the coin, the prices are rising sharply now. Ethereum founder, Vitalik Buterin, became a billionaire on May 3, when the currency’s value crossed $3000.
Institutional investors and more acceptance
AdvertisementThe 2020 rally for cryptocurrencies also brought institutional investors into the fold. Unlike retail investors, these are big firms and funds, who make investments in millions and can move the market faster than most others. You may have heard of billionaires and celebrities like Tesla founder Elon Musk, television personality and entrepreneur Mark Cuban, and others talking openly about crypto recently. This spurred more and more institutional investors, who would otherwise only be interested in the likes of bourses like
Not only that, everything that affects Bitcoin, affects Ethereum almost equally. In February this year, payments giant
AdvertisementEther’s core concept
When Buterin designed the Ethereum chain, he was trying to eliminate the limits of Bitcoin. The Ethereum chain is built in a way that it can work with anything from social networks to entire corporations, not just financial systems. Today, when the acceptance of blockchain is growing worldwide, it’s the Ethereum chain that’s in vogue over Bitcoin — and that’s simply because more applications can be built on top of it.
The Bitcoin chain is built on a “proof of work” concept, whereas Ethereum works on a “proof of stake” system that opens up a world of new options. It can reduce transaction costs, electricity consumption and more. It also allows investors to earn interest on Ether transactions, unlike Bitcoin, where new bits are created when transactions happen.
Ether is cheaper
The last reason is the simplest reason of all — the fact that even with its bull run Ether is cheaper than Bitcoin. While crypto trading is growing, it’s still at a nascent stage, meaning most investors want something they can trust. That’s why most of the money goes towards Bitcoin, Ethereum and Ripple, the three top currencies in the world. Speaking of Ripple, Ether has also gained from the fact that the company behind Ripple has a
Anyway, so when it comes to investing, people want to put their money where they can be assured gains most easily. That’s either Bitcoin or Ether, and one Bitcoin will cost you $50,000 against Ether’s $3803 (at 6.59 p.m., India time, on May 13).
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