Ether Rally Continues, For Now

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Ether (ETHUSD), the digital currency native to the Ethereum ecosystem, is nearing a $2,000 milestone as more institutional buyers have boosted their positions in recent weeks. One Ether is currently equal to $1,962.09, an increase of more than 22 times compared to a year ago.

“We believe investors are looking to diversify and are growing increasingly comfortable with Ethereum fundamentals,” wrote James Butterfill, an investment strategist at CoinShares, in a research note on Feb. 8. The asset manager noted that the total fund flows were “unusually focused” on Ethereum, with 80% of the totaling $245 million allocated to Ethereum.

Grayscale Investment Holdings, the biggest global crypto asset manager, now has 3.16 million Ether under management as of Feb. 18, with Ether accumulation showing the biggest change in its portfolio over the past seven days, according to data compiled by bybt.com.

Institutional buyers, inclusion by companies like PayPal Holdings, Inc. (PYPL), and praise from individual investors like Mark Cuban have helped to make the case for ether. Cuban has said “ETH has an advantage over bitcoin as a store of value,” noting he’s buying more Ether, not Bitcoin (BTCUSD), in an interview with The Defiant podcast.

That makes sense, as Ethereum is more than just a cryptocurrency by design, allowing for so-called “smart contracts” on the blockchain. “Thanks so Ethereum, a blockchain could be about much more than digital currency,” writes Jeff Roberts in his book Kings of Crypto: One Startup’s Quest to Take Cryptocurrency Out of Silicon Valley and Onto Wall Street. “It was now also a one-stop shop where people could sign contracts over anything from sports wagers to investment agreements to data storage.”

In that sense, Roberts compares Ethereum to an ecosystem like Apple, Inc. (AAPL). “It served as a platform much like what Apple provides developers so they can build apps for its iOS operating system,” he wrote. “And unlike Bitcoin, Ethereum offered an easy-to-learn programming language, called Solidity, for anyone who wanted to build applications.”

Like any cryptocurrency, Ethereum exposure is not without inherent risk, with some analysts noting that the behavior of top traders at Huobi, Binance, and OKEx may suggest a “lack of appetite for long positions.” However, other observers forecast the cryptocurrency’s price pushing through to $2,700. Ether is still a relatively new digital currency, and its promise and applications across different industries may take time to unfold.

“Smart contracts on blockchain are real and they remind of the early days on the internet when people realized there was a network effect,” Cuban said, noting that it took 25 years from that early stage of development. “We are right at that point right now where smart contracts on top of blockchain allow people to take anything that’s digital and turn into a product and sell it.”

Ethereum Price Eclipses $2,000 for All-time High

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No need to party like it’s $1,999. Ethereum has grown past that.

The world’s second-largest cryptocurrency by market capitalization, Ether (ETH), reached $2,000 for the first time today. That represents a 168% gain since the beginning of this year. Bitcoin, which started off with a much larger cap, has grown 93% in that same time span.

Ethereum’s rise has seemingly been fueled by at least two factors.

First, institutional and retail investment in Bitcoin has helped lift interest in cryptocurrencies more generally. Since the beginning of the year, as Bitcoin has moved from $32,000 to its current price of $56,000, only two non-stablecoin tokens in Nomic’s top 50 have lost value: the recently introduced ERC20 HEX and Compound Dai. Thirty-four have more than doubled in price, including Ether.

Second, decentralized finance (DeFi), much of which runs atop the Ethereum blockchain, has been booming. After several years of the network looking for a killer app, it seems to have found it through DeFi applications that allow people to lend money, accrue interest, and swap assets without going through a financial institution. DeFi Pulse, which tracks 70 different Ethereum-based DeFi applications, measures the total value locked into those applications to be above $42 billion.

“ETH hitting $2000 validates that scalability, applications around DeFi and NFTs are hitting hockey stick growth, and it is proving itself to be the leader in creating decentralized applications,” Paul Veradittakit, a partner at crypto VC firm Pantera Capital, told Decrypt. “This all leads to eventually an institutional-grade asset class.”

Indeed, in terms of institutional-grade assets, there are more Ethereum-based financial instruments available to investors—from the Grayscale Ethereum Trust in the US to 3iQ’s Ether Fund on the Toronto Stock Exchange.

Jordan Spence, CMO at wallet management tool MyCrypto, told Decrypt it’s a combination of factors. “The upwards price movement is a culmination of the entire industry putting in the work these last few years, and more people are catching on and want to get involved,” he said.

The price may not be done going up. As Spence pointed out, “We’ve seen a ton of growth among Ethereum and DeFi and more is on the way with ETH 2.0.”

Ethereum 2.0, the proof-of-stake replacement to the current network, launched last year but isn’t yet fully functional. The hope for ETH lovers, however, is that it will solve Ethereum’s congestion issues, allowing value to flow more freely across the network—and eliminate the need to use rival blockchains to scale.

Given everything that’s going on, Spence said the community has earned the $2,000 price. As for what’s next, he said, “Ultimately the new ETH floor price may be lower than $2,000 but seeing any number around and above it isn’t surprising to me anymore.”

Why Grayscale And Mark Cuban Bullish On Ethereum At $1,900

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What happened: The second-largest cryptocurrency by market cap, Ethereum (ETH), reached a new all-time high of $1,900 earlier today.

This new high means that ETH is officially up 2000% since March 2020, while Bitcoin (BTC) is up by 1200%.

Why it matters: In the wake of Bitcoin’s disruption, the second-largest cryptocurrency might have been overlooked by newer investors in the crypto space.

However, many analysts and crypto industry proponents believe that at current levels, ETH is undervalued.

Institutions are currently choosing to buy more $ETH than $BTC. Couldn’t be more clear that they see $ETH as undervalued. https://t.co/7E4dV8lLc6 — James Spediacci ⟠ (@JamesSpediacci) February 12, 2021

Leading digital asset manager Grayscale recently opened its Ethereum trust to accredited investors and has since been buying large amounts of ETH each day.

On February 12, the asset management firm bought 52,730 Ethereum, which over $94 million worth of ETH, or $8 million worth of BTC.

Institutional buying and the belief of industry proponents aside, the asset did receive some new backing from popular investors.

Billionaire tech investor Mark Cuban recently stated that “ETH has an advantage over BTC as a store of value.”

The Dallas Mavericks owner is most excited about smart contracts that are developed on the Ethereum blockchain, powering decentralized applications (dApps) and decentralized finance (DeFi).

According to Cuban, most of this innovation is happening on Ethereum, which leads him to believe ETH is becoming a better store of value than BTC.

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