What’s Behind Ethereum’s Massive Price Gains
Ethereum (ETH) has gained almost 30% this week, taking it close to its May all-time high of over $4,360. Today it broke the $4,000 barrier for the first time in three months, and many analysts were optimistic that the price could increase even further.
There are several factors driving Ethereum’s growth, from a surge in demand for non-fungible tokens (NFTs) to an overall rally in cryptocurrency prices. Let’s look at some of the reasons in more detail.
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- NFTs are booming
NFTs are a type of unique digital collectible. They can be a piece of art, like Mike “Beeple” Winkelmann’s work called “Everydays: The First 5000 Days,” which according to Decrypt, sold for almost $70 million earlier this year. NFTs can be sports trading cards or contain video clips of historic sporting moments. They can even be in-game assets purchased by gamers, including virtual land or weapons and character outfits.
What’s special about NFTs is that the copyright, authorship, and ownership information is coded into the token and stored on the blockchain. So while anyone could share a copy of Beeple’s art, only one person can own the NFT – it’s a bit like having a signed edition.
You may be wondering what NFTs have to do with Ethereum. Well, a sizable chunk of the NFT market is hosted on the Ethereum network. That means that when people buy and sell NFTs, a lot of the time, they need ETH to do it. And the more demand there is for ETH, the higher the price will go.
According to Token Terminal, a financial data aggregator for blockchains, over $560 million in revenue has been generated on Ethereum in the past 30 days.
- There are fewer Ethereum tokens available
One reason people are optimistic about Ethereum is that its upgrade at the start of August was generally considered to be a success. The upgrade – also known as the London hard fork – also means the number of ETH tokens on the market will grow more slowly.
One aspect of the hard fork was a code change that means ETH tokens will be burned as part of each transaction. This limits the number of ETH in circulation and also, in theory, reduces gas fees.
- Cryptocurrencies are trending upward, especially programmable blockchains
According to CoinMarketCap data, the total cryptocurrency market cap has increased from $1.57 trillion a month ago to $2.27 trillion today. And several of the big gainers – like Ethereum – are programmable blockchains with smart contract capabilities. Smart contracts are tiny pieces of code that live on the blockchain.
For example, Solana’s (SOL) price has increased over 285% this month. And Cardano (ADA), which will launch smart contract capability on Sept. 12, has increased almost 125%. It’s not so surprising since smart contracts are the special sauce behind NFTs.
Can it sustain this price?
The cryptocurrency industry is notoriously unpredictable, and every time there is a significant rally, you’ll find plenty of warnings that the market is on the edge of a crash. It could well be that we’re about to see a repeat of the extraordinary price runs followed by significant dips of 2013 and 2017.
Ethereum still faces problems with high gas fees and slow transactions. It is working toward an upgrade to Eth2, which will address some of those issues. But that won’t be complete until 2022.
Nonetheless, it’s hard to underestimate the importance of being the first mover – according to State of the dApps, almost 80% of applications are built on Ethereum’s network. So far, cheaper and faster blockchains have struggled to put much of a dent in that figure, suggesting Ethereum will keep its dominant position for some time to come.
If you invest for the long term, it is exciting to see these dramatic gains. But if the price falls next week, it is important to keep these fluctuations in perspective. After the dips of 2013 and 2017, the market eventually came back and reached even higher. And Ethereum, which is available from most top cryptocurrency exchanges, is one of the stronger digital currencies and one of the most likely to stand the test of time.
Renowned analysts expect Ethereum to hit $5,000 amid supply shock
Ethereum on-chain metrics signal peak accumulation by large wallet holders, traders are bullish on the altcoin.
Analysts believe that altcoin is bootstrapping the metaverse through the NFT projects built on the Ethereum network.
$113 million worth of ETH has been burned since London Hard Fork on OpenSea, a peer-to-peer NFT marketplace.
Cryptocurrency market capitalization has hit $2.38 trillion overall as Ethereum’s dominance rises to 20%. The altcoin has posted over 400% gains since the beginning of 2021.
Ethereum accumulation by whales likely to push ETH to all-time high
Addresses holding Ethereum for over a year have increased consistently, hitting all-time high levels. This implies that the outlook among long-term holders is still bullish. Interestingly, few active wallets are holding Ethereum between $3500 and $3800 level.
Analysts expect inactive wallet addresses to resist selling or exchanging their holdings in the short term. This reduces the selling pressure on exchanges, offering the altcoin further room for its upward climb.
In/Out of the Money: Ethereum.
Despite increased competition from NFT projects on Ethereum alternatives like Solana and Cardano, analysts still consider ETH to be powering the metaverse. Pseudonymous analyst @iamDCinvestor tweeted:
people selling fiat, to buy ETH, to buy NFTs, to earn more ETH, to keep it and use it in DeFi, and buy even more NFTs, (etc.)
you are participating in the bootstrapping of the new global metaverse economy,
and $ETH is its currency — DCinvΞstor (@iamDCinvestor) September 3, 2021
The increasing popularity of NFTs, alongside the rising burn rate, is feeding the “supply shock” narrative of Ethereum. The most significant contributor to Ethereum’s burn is OpenSea, an Ethereum based peer-to-peer marketplace for NFTs. Based on data from ultrasound.money, OpenSea has contributed to burning 28,624 Ether. The burn rate has increased to hit 4.37 ETH/min.
Overall, analysts have a bullish outlook on Ethereum. Pseudonymous analyst @Thecryptomist has predicted that Ether is likely to hit $5000.
FXStreet analysts have predicted that the altcoin is likely to cross $4100 in the ongoing price rally.
Ethereum continues its run higher as NFT purchases spur on frantic buying
EtherRocks one of the latest crazes
The price of Ethereum continues its meteoric run to the upside as NFT purchases help spur on frantic buying.
To give an idea, EtherRocks are the latest craze with prices of those NFTS surging. According to the Twitter feed @etherrockprice, the price floor has reached 800 Ether or approximately $3,038,300 dollars. Apparently that is the minimum price for one of the EtherRocks. The high price reaches to 1027 Eth.
This is what $3M will get you.
For the price of Ethereum, it reached a day high price of $4380 back on May 12. Then tumbled down toward $1700 in May, June, and July before making the most recent run to the upside.
Since the July low, the price has surged 134% (over 45 trading days). The price high extended back above the $4000 level today to a high of $4025. I guess that would increase the minimum price for Rock ID 91 to $3,220,000 all things being equal ($4025 x 800 ETH).
If that was not impressive enough, another digital currency, Solana is doing even better. If that was not impressive enough, another digital currency, Solana is doing even better.
Solana, which says it’s a “fastest blockchain in the world and the fastest growing ecosystem in crypto with over 400 projects spanning DeFI, NFTs, WEeb3 and more”, has seen its price move up from $22.11 on July 20 to a high price at $146.31 today. That’s a gain of 561% over 45 days.
I just went to Solana website and although the blockchain is fast, it definitely slowed down my computer. It has a pretty slick video there though ; ).
NBA superstar Stephen Curry recently has been active in the Bored Ape Yacht Club NFT after purchasing an NFT depicting and ape with blue fur wearing a plaid suit. He change his profile picture to the NFT on Twitter. He payed a reported $180,000 for the NFT. That’s chump change or should I say “chimp change”. NBA superstar Stephen Curry recently has been active in the Bored Ape Yacht Club NFT after purchasing an NFT depicting and ape with blue fur wearing a plaid suit. He change his profile picture to the NFT on Twitter. He payed a reported $180,000 for the NFT. That’s chump change or should I say “chimp change”.
Great stuff.