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Both Bitcoin and Ethereum are recording huge price gains after experiencing the biggest price drop this year. The bear is reversing setting the market for a possibility of a sustained bull run. Though the gains are visible in both cryptocurrencies, Ethereum gains are higher in comparison to bitcoin. In its lowest, Ethereum fell below the $2000-dollar mark from the highest of its over $4000. On the other hand, the price of bitcoin fell below $30,000 after a high of over $60,000.
The crypto market in general has added over $250 billion within the last few days. This indicates the level of optimism in the market.
Rise of Bitcoin
Bitcoin has been holding a leadership position in the crypto market since its launching. Although some analysts predict Ethereum might assume leadership in the future, the current status quo remains. At its highest, the price of bitcoin exceeded over $60,000. The highest price ever of any cryptocurrency. After this peak, the price saw a retracement of over 50%. This sent it to the lows of 30,000 dollars.
This drop-in price has seen critics predict the end of bitcoin. It is key to note that the collapse of bitcoin has been predicted since it was created over 10 years ago. However, the more investors predict its doom, the higher it soars. Cryptocurrencies remain controversial to date. Some refer to them as Ponzi schemes whereas some governments are restricting their use.
This rise in the price of bitcoin comes after testing a resting zone in the price charts. The support and sentimental zone of $30,000. Normally, assets tend to reverse in price at support zones. This zone has decreasing selling power and increasing buying power. The huge number of buyers at this point has contributed to the price increase. This combined with the sellers exiting the markets increases the buying activity triggering the price to rise.
A key contributor to the price drop was the increased crackdown on bitcoin by the Chinese government after it banned both mining and transacting in cryptocurrencies. As a market leader in bitcoin mining, these actions resulted in a massive market sell-off making the price fall. This has forced miners to relocate helping bring back market confidence. This is injecting stability in the market helping reverse the price drop.
The United States government is proposing regulations for the cryptocurrency market. Although it is yet to actualize, there are jitters in the market of a further price decline if implementation succeeds. Being among the biggest crypto markets, what happens in this part of the world will be key to the direction the market will take in the immediate future.
As highlighted earlier, the price of bitcoin keeps surprising everyone. As a market leader, its price movement is driven more by sentiments. It is still not clear if the current price rise will be sustained. However, it is normal for the asset to experience a long-sustained price trend.
Due to the suppressed nature of its supply, bitcoin will always maintain high prices as long as there is demand. There could only be 21 Million bitcoins in existence. This is a very small numb in comparison to other cryptocurrencies. It should not surprise us if bitcoin surpasses the all-time price as demand and interest in cryptocurrencies continue to grow. Large investors and institutions are starting to invest in the asset increasing the chances of higher prices in the future.
As good and successful as bitcoin seems, it has some limitations that could limit its long-term viability. These vary in usage, transaction costs, and security. Bitcoin transactions are very slow and costly in comparison to the competitors. This has made it challenging for retailers to adopt it.
Transactional costs remain high and noncompetitive. Infrastructural development in support of its usage and accessibility remains minimal. These limitations minimize the chances of bitcoin achieving its potential.
Ethereum Price Rise
Ethereum ranks as the second cryptocurrency after bitcoin in market valuation. Termed as the bitcoin killer, Ethereum’s rise has been sustained and progressive. Earlier the year, Ethereum crypto hit the highest price ever of $4000. Soon after, the prices fell to hit the lows of below $2000.
The recent price gain has seen prices surpass the $3000 mark. In comparison to bitcoin, Ethereum is experiencing a higher price gain. This indicates investors’ confidence in the asset in comparison to its peers. Check out this article to learn more about Ethereum price gain.
Strengths of Ethereum
The one strength Ethereum has over most of its peers is its broad usage capabilities. Ethereum is created as a platform supporting blockchains solutions. Some of these include;
- Development of Non-Fungible Tokens
- Creation of Peer Cryptocurrencies
- Development of blockchain solutions
- Transactional currency
Compared to bitcoin whose only function is a transactional currency, Ethereum has better diversification. This minimizes risks associated with some uses becoming irrelevant in the market. Most analysts and investors predict that Ethereum will ultimately dislodge bitcoin from its pole position
Some of these solutions on Ethereum have been very successful. An example is the NFT concept that is facilitating millions of dollars in transactions per day. There has also been a surge in cryptocurrencies created on the Ethereum network. The majority of industries exploring the use of blockchain are considering riding on the Ethereum network to develop their solutions.
This indicates Ethereum is a strong cryptocurrency supported by real-life solutions and innovations.
Ethereum EIP-1559 Update
Ethereum has just received a network update. This is being termed as one of the contributors driving its price. The update is meant to burn coins in the market as well as improve on the gas fee. Burning coins is equal to reducing supply. Supply reduction with sustained demand causes price increase. To learn more about this update, click here.
The update has been successfully implemented as per the prediction
The latest bullish trend in the crypto market is in its initial stages. As highlighted earlier, these trends tend to run for some time. Could this result in breaking the current existing highs? Nobody knows. However, the crypto market price volatility will remain.