The popular cryptocurrency Ethereum spiked last week as a much-anticipated upgrade to its software came to fruition. Designed to assist with Ethereum’s transition to an eco-friendlier blockchain network, the recent enhancement has already caused a spike in the growing cryptocurrency, allowing it to currently dominate its rival Bitcoin.
Not only did the prices for Ethereum spike 6% in only two hours last week, but that drove prices to a three-month-high above $2,800 once the upgrade was released. This recent increase in value makes year-to-date gains over 280% versus bitcoin’s 33%.
Since its creation almost 14 years ago, Bitcoin has held the top space in the cryptocurrency market. Since April, though, Bitcoin has taken a hit due to its lack of environmentally friendly mining practices. In fact, many cities in China have completely banned the mining of the cryptocurrency due to its strict environmental laws. In addition, Tesla’s Elon Musk sold a good bit of his Bitcoins, said that he would stop allowing vehicle purchases using Bitcoin, and halt his investing in the cryptocurrency until renewable energy is used for mining. Prices plummeted and are still almost 40 percent less than the high mark in 2021. Ethereum is faring better and is only 30 percent down from its high in May.
The current decrease in Bitcoin from 70 percent to 40 percent is notable, as is Ethereum’s market value increase, which has jumped from 10 percent to 20 percent This gave the second-largest cryptocurrency in the world a whopping $325 billion market capitalization.
Despite Ethereum’s recent upgrade and increase in market value, the transaction verification process used is still proof-of-work technology, as with Bitcoin, that still involves massive use of energy to secure networks. There is another upgrade on the horizon for Ethereum, though, as the cryptocurrency has plans to complete its transition to the proof-of-stake mechanism in 2022. This new technology will perform most of the high energy work by making transaction validators contribute their own cryptocurrency while transactions are being verified.
All signs point to the expansion of Ethereum adoption as a positive one. Big players like Goldman Sachs have already committed to adopting the cryptocurrency, as they recently filed the paperwork necessary to begin creating their own exchange-traded fund investing in decentralized finance. This means that they will work with financial applications that are dependent on blockchains versus banks and exchanges. In fact, the majority of the $100 billion decentralized finance market already occurs on Ethereum.
According to Blumberg Intelligence Senior Commodity Strategist Mike McGlone, “Ethereum has been outperforming Bitcoin for about two years, and we expect more of the same.” He credited the cryptocurrency’s recent upgrade and adoption for their success and steady growth.