World's second-largest cryptocurrency edging towards landmark valuation amid Bitcoin frenzy

Ethereum 2.0
(Image credit: William Hague / The Ethereum Foundation)

It may not be as well-known as Bitcoin, but Ethereum has had a sterling start to 2021. The world’s second-largest cryptocurrency by market value reached a record high of $1,824.59 earlier this week, beating its previous peak of $1,761.35.

Ether, the name of the native cryptocurrency on the Ethereum blockchain, has more than doubled in value in 2021, outperforming Bitcoin, which has also reached record highs in the early months of the year. The surge in the value of cryptocurrencies is likely the result of low liquidity across crypto exchanges.

It is thought that many investors may have taken direct custody of their coins or moved them to decentralized finance protocols instead of keeping them on exchanges. If more Ether coins are being stored in hot or cold crypto wallets rather than being listed on exchanges, sell-side liquidity could have dried up, leading to price increases.

Going up and up

Another potential reason behind ether’s value increase this year is the announcement that the Chicago Mercantile Exchange would allow the trading of Ethereum futures contracts – granting further legitimacy to the cryptocurrency.

In addition, although cryptocurrencies have had a few setbacks – including a recent spate of crypto-mining malware – they are now pretty well-established within the financial market. This gives cryptocurrency miners confidence in their assets, which in turn drives up valuations, whether individuals are building their own mining motherboards, using cloud-based mining providers, or simply conducting online trades.

Whatever the underlying reason for the price rises, things are certainly going well for both Ether and Bitcoin owners. While the former has more than doubled in value this year, Bitcoin has experienced a 58% rise.

Via CoinDesk

Barclay Ballard

Barclay has been writing about technology for a decade, starting out as a freelancer with ITProPortal covering everything from London’s start-up scene to comparisons of the best cloud storage services.  After that, he spent some time as the managing editor of an online outlet focusing on cloud computing, furthering his interest in virtualization, Big Data, and the Internet of Things.