Ether, the second largest cryptocurrency on this planet, is approaching an all-time excessive
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Ether is approaching an all-time high. The cryptocurrency, one of many alternatives to Bitcoin, rose up to 17% on Tuesday to an intraday high of $ 1,439. This is based on data from the CoinDesk industry site.
That's only a small part of the record Ether hit of $ 1,448 in early 2018, when the major cryptocurrencies led by Bitcoin hit new heights before plummeting sharply later in the year. Ether, the world's second largest cryptocurrency by market value, has almost doubled since the beginning of the year.
Bitcoin has been in the spotlight for a few months thanks to a rapid rally that saw it hit new highs. The cryptocurrency was up nearly $ 42,000 a few weeks ago but has since declined, last trading at $ 36,980.
It's still up nearly 30% this year, up more than 800% from its 2020 low in March. Bitcoin bulls say the surge was aided by increased institutional buying and perceptions that it was an uncorrelated safe haven resembling gold.
Skeptics in the traditional financial world – like the economist Nouriel Roubini and the strategist David Rosenberg – see this as a speculative bubble.
Bitcoin was the original cryptocurrency, developed in 2009 as a peer-to-peer payment system that does not require a central authority to maintain. Alternative digital coins created after Bitcoin, such as Ether and XRP, are known as "Altcoins".
Ethereum, the network on which the ether is based, is touted by its proponents as a potential infrastructure for a decentralized Internet. This is because developers can create applications on Ethereum which are known as "decentralized apps".
The Ethereum blockchain – a digital ledger for transactions in the cryptocurrency – began with a major upgrade called Ethereum 2.0 late last year. Ether investors say this will make the network faster and more secure.
"Ethereum technology has seen tremendous development since its 2017 high," Nicholas Pelecanos, head of trading at crypto firm NEM, told CNBC. "At the time, the new capital investment in the space was largely speculative and for features that were still under development."
"Now there are a lot of these features, and more cutting-edge features are expected to be released. However, speculative interest in Ethereum is still quite limited. I believe this number is much higher than the current price. "
Critics have complained about sky-high transaction fees for Ethereum. Average transaction costs for Ether rose to a record high of $ 16.53 on Jan. 11. According to BitInfoCharts, the average average transaction fees tripled in 2018.
By comparison, Bitcoin transaction fees are rising, but nowhere near their peak in late 2017. They rose to $ 17.09 on Jan. 12, still a 69% decrease from the all-time high of $ 55.16 on Jan. December 2017.