Ethereum price smashes records to reach a new high – here’s how it happened

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There was a time when the success or failure of the whole cryptocurrency market rested on the shoulders of Bitcoin. These days, Ethereum seems to be the digital asset grabbing the headlines and the attention of investors.

Here’s how the world’s second-largest cryptocurrency has managed to blossom and hit record highs recently.


What’s all the fuss about when it comes to Ethereum?

The Ether (ETH) token has been growing astronomically since its inception back in 2015. Like most other cryptocurrencies, this growth is mostly due to speculation and big promises.

However, unlike most digital assets, Ethereum is actually beginning to deliver on some of its potential.

There’s a lot of development on the network. This increase in activity has led to the creation of new markets that are attracting piles of cash. Two of the most successful applications are focused on:

  1. DeFi (decentralised finance)
  2. NFTs and digital art

Is the new all-time high for Ethereum the beginning or the end?

Ethereum’s new all-time high sits at around $4,700 (£3,480). This is pretty amazing when you think that the price of the token was just $730 (£540) at the beginning of the year.

The world of cryptocurrency is volatile, and no one really knows how to value these assets properly. So anyone claiming the price is definitely going to go higher or lower doesn’t actually have anything to base that claim on.

If the entire market bull run continues, then it’s possible Ether’s value can stay on its upward trend. But if markets get a shakedown, the price will not be immune to a big crash. A few simmering dangers to the price of Ether right now include:

  • Potential regulation around stablecoins (which are mostly built on top of the Ethereum network)
  • The possibility of the NFT bubble exploding
  • Wider cryptocurrency risks and worries


What lays ahead for Ethereum?

Although the most popular DeFi and NFT projects rely on the Ethereum network, competitors are cropping up. There’s lots of development elsewhere, with cryptocurrencies such as Cardano (ADA), Solana (SOL), and Avalanche (AVAX) gaining ground.

All of these currencies promise to be ‘Ethereum killers’ by doing things better. Ether has had a strong head start with its applications, but the tech moves so fast in this space that another token could easily usurp it.

Ethereum is currently transitioning to a 2.0 version of the network. This change creates some exciting opportunities, but even if the tech advances, the value of the token can still flop. Many people forget that a lot of progress was made during the years when the whole crypto market was in the gutter.

Just because the technology is improving does not mean that a price increase is a sure thing. What happens in the wider markets will have a bigger impact on the Ethereum price than how the network advances.

Investing in Cryptocurrency is extremely high risk and complex. The Motley Fool has provided this article for the sole purpose of education and not to help you decide whether or not to invest in Cryptocurrency. Should you decide to invest in Cryptocurrency or in any other investment, you should always obtain appropriate financial advice and only invest what you can afford to lose.

The post Ethereum price smashes records to reach a new high – here’s how it happened appeared first on The Motley Fool UK.

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