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Highlights
- Ethereum has gained mass attention from investors over the past one year, with its price rising over 770%.
- The cryptocurrency has rallied faster than Bitcoin and has investors speculating if it can become the largest cryptocurrency in the world.
- NFTs and DeFi applications have been two of the biggest factors influencing Ethereum’s price rise.
Ethereum has cemented its place in the crypto world as the world’s first programmable money. Being the second largest cryptocurrency in the world, Ethereum surpassed Bitcoin in terms of the crypto’s price rise during early 2021.
Such monumental was Ethereum’s journey in 2021, that investors quickly jumped on the bandwagon to enjoy its bullish rally. The cryptocurrency has seen increased popularity due to a variety of reasons. Many are suspecting if Ethereum could surpass the market cap of Bitcoin and eventually take its place as the largest cryptocurrency in the world.
GOOD READ: Will People Really Buy a Movie Ticket With Cryptocurrency?
Ethereum’s price rose by a whopping 770% from US$352 in September last year to its current price of US$3,066. That means your US$100 worth of Ethereum in the last year would be equal to US$871 today!
Did you miss these one year gains on Ethereum
Given Ethereum’s stellar performance over the past one year, here is a closer look at the factors that made the crypto’s rise possible.
Ethereum’s diversified usage
Ethereum’s differentiability from Bitcoin lies in the fact that it is relatively cheaper in per unit terms. This fact alone pulls investors towards it, giving them a psychological feeling of making a cheaper investment. Additionally, Ethereum’s usage lies far beyond Bitcoin’s as it offers greater applicability in areas such as decentralisation and Smart Contracts.
The rising popularity of cryptocurrencies across major global financial institutions has also brought greater faith into crypto trading, and Ethereum has been a beneficiary of this growing consumer sentiment. ING Group, a Dutch multinational bank, started using Ethereum for payments while, JP Morgan, another big name on the list could utilise the Ethereum-backed Smart Contracts to develop its own digital currency.
RELATED READ: What are Smart Contracts?
However, the biggest contributors to Ethereum’s meteoric rise have been NFTs and DeFi applications. NFTs have seen growing popularity among collectors of art, video game items and fan-based tokens. These NFTs run on the Ethereum network which generates unique IDs for them. Thus, the ongoing surge in NFT investors has underpinned Ethereum’s recent price rise.
Additionally, decentralised apps or DApps, are digitally created spaces that run on a blockchain. For Ethereum, this has meant increased attention from institutional investors and an overflowing customer base.
However, given its massive rise in the markets, Ethereum is also subject to a series of risks. There are many Ethereum rivals currently in the market that may take over the crypto in some time. Also, the volatile nature of the cryptocurrency markets makes them susceptible to drastic fluctuations.
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