Ether Outperforms Cryptocurrency Market Amid ETF Speculation and Planned Network Upgrade
Summary:
Ether (ETH) has seen a 58% price increase in the past month, outperforming the cryptocurrency market by 14%. The bump is partly attributed to optimism around the potential approval of an Ethereum spot ETF, with a verdict expected by May 23. Other contributing factors include a planned network upgrade that could lower transaction fees. Despite failing to maintain a value above $4,000, Ether's market cap puts it among the top 20 globally traded assets. The growth of the Ethereum ecosystem is seen as beneficial for Ether’s price. However, Ether pro traders' bullishness may increase the risk of a sell-off if Ether doesn't break above the $4,000 mark soon.
In the past month, Ether (ETH), has experienced a rise in value by 58%, surpassing the general cryptocurrency market by an impressive 14%. Although Ether failed to retain its position above $4,000, it did manage to climb to its most impressive price in over two years, closing the gap against Bitcoin (BTC), the dominant cryptocurrency in the same period. This optimal performance is in part credited to the optimistic speculation surrounding the potential approval of an Ethereum spot exchange-traded fund (ETF), with its outcome expected to be officially declared by the U.S. Securities and Exchange Commission by May 23.
In this context, some traders have questioned whether Ether’s recent financial success is based solely on the anticipation surrounding the ETF decision, suggesting a possible dip in value following the announcement, at least initially. In the meantime, other circumstances are believed to have contributed to Ether’s financial gains, such as the planned Dencun network upgrade set to take place on March 13. This major change is slated to drastically relieve Ethereum's network of its historically high transaction fees, which have been stagnant at $4 or more since November 2023.
Critics of Ether argue that despite Bitcoin reaching a record high on March 12, Ether still stands 19% short of its historical high of $4,870 in November 2021. However, the current market cap of Ether, which stands at a formidable $480 billion, has placed the cryptocurrency among the top 20 globally traded assets, edging out established entities like UnitedHealth and ExxonMobil.
The expected yield for Ether investors participating in the network's proof-of-stake consensus stands at 4%, but the primary demand for ETH is dependent on the activity within its ecosystem. Regardless of happening on the second layer, the expansion of the Ethereum ecosystem is beneficial for the price of Ether. This is because ETH is needed for verifying and processing transactions on the base layer, and is also utilized as a form of collateral in several decentralized applications (DApps).
Current data emphasizes the dominance of the Ethereum network, especially when layer-2 solutions are taken into account. While fees can reach above $20 per transaction, the Ethereum base layer has amassed nearly 590,000 active addresses, with its volumes continuing to grow.
Ethereum network professionals appear optimistic about Ether surpassing the $4,000 mark, despite the potential risk of increased leverage. To ascertain the exact sentiment, analysing Ether futures can be useful. Under typical market conditions, the monthly future contracts are priced 5% to 10% above standard spot markets, due to extended settlement period.
This information is provided for general knowledge and is not intended to serve as legal or investment advice. The perspectives expressed here are solely those of the author and may not necessarily align with Cointelegraph's views and opinions.
Published At
3/12/2024 10:00:00 PM
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