Ethereum Is Reaching An All Time High—Here’s Why
Cryptocurrencies have been making major headlines over the past week or so. Elon Musk announced Tesla’s $1.5B investment in Bitcoiin as well as broke the news that Tesla will now accept Bitcoin as a form of payment. The WallStreetBets Reddit community moved on from GameStop stocks and began targeting their efforts on DogeCoin. But while all of that grabbed the attention of financial media outlets and the casual investor, Ethereum quietly reached an all-time high.
Currently trading at $1,732.73, Ethereum reached its recorded setting value on Monday February 8th 2020, up year-over-year from $228.80. It has been up-and-down over the past five days, but over the past month the cryptocurrency has consistently trended upwards.
Part of the reason that Ethereum was able to reach its current peak is due to the influx of money into Bitcoin. Bitcoin is also trading at its all-time high of $44,89 and it had been heading that way for quite some time after the initial Bitcoin bubble burst. As Bitcoin trended upwards and seemed to plateau at times, many investors began looking towards secondary options; That alternative being the second-largest cryptocurrency, Ethereum.
In the short-term, the current surge in both cryptocurrencies’ prices can be directly linked to Musk’s investment, but the reality is that throughout 2021 Ethereum has received a sizeable amount of the $2.4B that was poured into the cryptocurrency. Over the last week, Ethereum received an astonishing 80% of the $245M that went into cryptocurrency, per a Yahoo Finance report.
So, when taking a step back to look at the entire picture it becomes clear that the entire cryptocurrency market has been growing significantly over the past year and Ethereum was a major beneficiary of that. Unlike Dogecoin, which saw its boost thanks to social media, Ethereum has been steadily increasing in value for over a year and gained its place as the second-largest cryptocurrency is both volume and market capitalization (the value of the cryptocurrency multiplied by the amount of tokens in circulation).
The true impact of Ethereum’s status as the second-largest cryptocurrency lies in its market capitalization. When compounded by its volume, it is easy to see why investors were very eager to buy into the budding cryptocurrency.
When looking to Ethereum’s future—as well as the future of Bitcoin—it all comes back to Elon Musk. The ripple effect of Tesla’s investment and its acceptance of Bitcoin for payment will likely lead to an even higher influx into cryptocurrencies, namely Bitcoin but also Ethereum.
David Grider, lead digital strategist at Fundstrat Global Advisors told Yahoo Finance that “We see this (Tesla’s move) as an important moment for market validation but are not surprised by the move. We think many companies will look at that stored wealth and that consumer base and start accepting crypto as a greater means of payment.”
The normalization of cryptocurrencies in markets outside of finance will only lead to an increase in those looking to purchase cryptocurrencies, either for investments or for personal use. The financial industry knows that and it seems as though they are starting to break away from viewing Bitcoin as the end-all-be-all cryptocurrency, something that bodes particularly well for Ethereum.