2021-10-14 03:25:38

What happened to the Ethereum price in the FY22 first quarter?

Image source: Getty Images

The Ethereum (CRYPTO: ETH) price is up 3% over the past 24 hours. One Ether is currently trading for US$3,617 (AU$4,888).

That gives the world’s number 2 cryptocurrency a market cap of some US$427 billion, according to data from CoinMarketCap.

With today’s gains, the Ethereum price is up 22% so far since the start of the new financial quarter on 1 October (Q2 FY22).

Now, cryptocurrencies don’t abide by the financial reporting standards and quarterly market updates like ASX companies do. At least not yet.

But here’s how the Ethereum price moved over the past Q1 FY22, a quarter that saw the S&P/ASX 200 Index (ASX: XJO) gain 0.4%.

How did the Ethereum price move in Q1 FY22?

You’re unlikely to find crypto investors who bought Ether on 1 July and sold on 1 October complaining.

On 1 July the Ethereum price stood at US$2,114. By 1 October it was trading for US$2,967, or a gain of 40%.

Not that the token moved up in any kind of straight line. The volatility that cryptos are well-known for was certainly on display over the 3 months.

On 20 July the Ethereum price dipped to US$1,787. By 6 September it hit a quarterly high of US$3,960. That’s a price move of more than 121%.

It also means investors who bought at that high and sold on 1 October could have lost 25% of their investment.

Proceed with care.

Is Ether like Bitcoin?

Ether is like Bitcoin (CRYTPO: BTC) in that both tokens rely on the blockchain. But from there the 2 digital coins vary greatly.

Bitcoin predominantly serves as an alternate to fiat currencies. You can buy things with it from supporting merchants, send it to family or businesses overseas, or sit on it in the hope it goes up in value.

Ethereum on the other hand has many real-world use cases.

Ray Brown, market analyst at Australian crypto and Bitcoin exchange CoinSpot, explained:

Where Bitcoin functions primarily as a currency, Ethereum has been designed as an “open source” network that provides a foundation for other applications and smart contracts. For this reason, Ethereum provides the ideal environment for the 1000s of other altcoins that have developed and scaled their own projects using the Ethereum blockchain.

Will the ATO know if I made a profit from the rising Ethereum price?

In short, yes, they will.

As H&R Block Inc (NYSE: HRB)’s Australian tax communications director Mark Chapman told my Foolish colleague Tony Yoo:

Cryptocurrency is not really anonymous. The ATO receives data from Australian designated service providers (DSPs) which enable it to identify the name of the cryptocurrency investor, date of birth, addresses, ABN (if applicable), email address, contact phone numbers and social media accounts.

So, whether you make or lose money from the Ethereum price moves in the upcoming financial year, be sure to include that in your tax filings.

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