Ethereum's price is trading at a new all-time high. The digital currency is now worth $ 1,432.
Ether just set a new record. Cryptocurrency number two reached a price of $ 1,432 today following a surge in interest in the markets in recent weeks.
It is the first time that ETH has exceeded this price level since January 2018.
Towards the end of the infamous cryptocurrency bull run of 2017, the token memorably surged around 100% in a month, reaching $ 1,420 in mid-January.
It then suffered a 94% price drop over the course of the so-called “crypto winter,” the period from 2018 to 2019 when prices plummeted after a year of mania in the markets.
In December 2018, it was trading just above $ 80.
As such, the project was ignored by many as a cancellation along with the numerous failed Initial Coin Offering (ICO) projects it helped create.
Ethereum fueled much of the frenzy ICO speculation of 2017, as new projects raised capital by collecting ETH from investors. Many turned out to be scams, casting a dark light on Vitalik Buterin and those in Ethereum's inner circle.
Ethereum, the foundation of DeFi
From late 2018 to 2019, Ethereum became the base layer for several new protocols that have since been coined as building blocks of the “DeFi” umbrella. Uniswap, Synthetix, and Aave, among others, were built on top of Ethereum and have captured a significant user base alongside Ethereum.
ETH continued to trade at just $ 130 (91% off its all-time highest price) in January 2020, but saw huge gains as DeFi exploded for the year.
In 2020, it increased its price by 483%, beating Bitcoin's 300% gain. Meanwhile, the total value locked (TVL) on DeFi protocols on Ethereum soared from $ 600 million to more than $ 15 billion.
It is now at $ 24.85 billion, according to DeFi Pulse.
Ethereum 2.0's release in late 2020 also sparked renewed interest in its native asset; users needed to accumulate 32 Ether to participate in the bet.
Ethereum's price crossed $ 600 when the network's Beacon Chain was implemented on December 1, 2020, the launch date that was set if the contract accumulated a minimum threshold of 524,288 ETH.
There are now 2,620,642 tokens staked within the contract, worth around $ 3.66 billion on post.
The rise of Ethereum to 2020
While ETH saw a price surge thanks to DeFi and the launch of Ethereum 2.0, it was also affected by the macroclimate and change in attitude towards Bitcoin.
Fueled by an intensified money printing phase in response to the Coronavirus, the original cryptocurrency's value proposition as 'digital gold' strengthened in 2020. Among its biggest proponents were companies like MicroStrategy, which has invested more than $ 1 billion. dollars, celebrated investors like Paul Tudor Jones, and insurance companies like MassMutual.
Around the same time, PayPal also announced the addition of support for BTC and ETH, among other crypto assets. S&P Dow Jones also revealed that it would launch cryptocurrency indices in 2021.
The favorable climate of the cryptocurrency space led to Bitcoin breaking $ 20,000 for the first time in December. It then rose more than 100% in the space of three weeks, while the price of Ether also rose significantly.
The two assets are closely correlated – when funds flow into Bitcoin, it often leads to price increases for Ethereum soon after.
Ethereum experienced a particularly violent upward movement in early January. On January 3, it was up 40% in a day from around $ 800 to $ 1,100. It has been steadily increasing in price ever since.
The top two cryptocurrencies have been in a parabolic race, leading some to question whether the highs are sustainable. Even in bull markets, crypto assets can experience 50% drops before another wild run.
On January 11, both assets underwent a major correction of more than 20%, although data showed that high-net-worth investors quickly bought the drop.
EIP-1559 on the horizon
In addition to the continued development of Ethereum 2.0, the network will implement EIP-1559 in the future.
EIP-1559 is an “ETH buyback” proposal that was first presented by Vitalik Buterin, with the help of Eric Conner. It involves burning most of Ethereum's gas fees, which in turn reduces the supply of ETH. It could make Ether a deflationary asset, which means it would become scarcer over time.
With the increased attention around the cryptocurrency space adding to the various developments within the Ethereum ecosystem, it is possible that ETH will experience higher highs in the future. Experts have suggested that Bitcoin could hit six digits on a long-term horizon, although Ether tends to receive less widespread attention.
Still, some investors who follow the cryptocurrency market have set big targets for Ethereum's execution during this market cycle.
Ether is currently trading at $ 1,415. Ethereum's market capitalization is just under $ 161.8 billion.