An upcoming upgrade for Ethereum, the most-actively used blockchain in the world, is adding to the mania around cryptocurrencies sparked by the jump in Bitcoin.
Ethereum has reached a milestone toward a network change that would allow it to process a similar number of transactions as Mastercard Inc. and Visa Inc. The shift to the new system — Ethereum 2.0 — could curb the total supply of digital currency Ether, which is already up more than 350% so far in 2020.
“While Bitcoin has understandably dominated market attention over the past number of weeks, Ether has been quietly building steam in its shadow,” said Konstantin Richter, founder of blockchain infrastructure platform Blockdaemon. As Ethereum 2.0 comes closer, “market confidence is peaking,” he said.
Bitcoin has dominated the cryptocurrency sector recently after surging toward the record of $19,511 set in 2017. Increasing purchases by retail investors, institutions and even billionaires have all been cited as factors for the climb. But the rally has also stirred reminders of the cryptocurrency’s famed volatility, epitomized by the bust that followed the ascent three years ago.
Retail flows into the sector seem to be regaining a taste for speculation unseen since 2017, said Seamus Donoghue, business development vice president at digital infrastructure provider METACO, adding “it’s time to be cautious.”
Evercore ISI technical strategist Richard Ross wrote in a note Tuesday that he sees potential for Bitcoin to double to around $40,000. He said Ether could rise to $1,000, compared with its current level of about $600.
Since Ethereum went live it 2015 it has relied on an energy-intensive and slow method to ensure the computers on its network agree on the current state of its digital ledger. Developers have been working for years to transition to a system that instead uses a pooled amount of Ether to secure the network and allow it to reach consensus much faster.
— With assistance by Olga Kharif, and Matthew Leising