For the first time in more than nine months, Ethereum (ETH) has broken through the $1,900 resistance, igniting a bullish trend for digital assets. This level was fought for, as ETH had been lagging behind $1,900 for the previous week. Investors have undoubtedly welcomed this recovery, but what is driving the price?
What is Ethereum?
Ethereum is a decentralized blockchain platform that enables developers to build and deploy decentralized applications (dApps) using smart contracts. It was first proposed by Vitalik Buterin in 2013 and launched in 2015. Ethereum is considered the second-largest cryptocurrency by market capitalization after Bitcoin.
Unlike Bitcoin, Ethereum was designed to be more than just a digital currency. It allows developers to create their tokens, which can be used for various purposes, including crowdfunding, voting, and trading. These tokens are called ERC-20 tokens, and they operate on the Ethereum blockchain.
The core of Ethereum’s technology is the smart contract. These are self-executing programs that can automatically execute the terms of a contract when certain conditions are met. Smart contracts allow Ethereum to be used for a wide range of applications beyond just payments.
One of the key advantages of Ethereum is its scalability. Unlike Bitcoin, which has a fixed block size limit, Ethereum uses a more flexible block size limit that can adjust to changing demand. This means that Ethereum can process more transactions per second than Bitcoin.
Another important feature of Ethereum is its decentralized governance model. The platform is governed by a community of developers and users who work together to make decisions about the platform’s future. This means there is no central authority controlling Ethereum, making it more resilient to censorship and other forms of control.
Ethereum is also known for its vibrant ecosystem of developers and apps. There are thousands of dApps built on Ethereum, ranging from decentralized finance (DeFi) applications to online gaming and social networks. These Apps are powered by Ethereum’s smart contracts, which enable them to operate in a decentralized, trustless manner.
Overall, Ethereum is a powerful platform that has the potential to transform a wide range of industries. Its smart contract technology, decentralized governance model, and vibrant ecosystem of developers and dApps make it an attractive option for anyone interested in building decentralized applications.
Why Do Bitcoin Prices Rise?
Bitcoin prices can rise due to a variety of factors, including changes in demand, global economic conditions, and investor sentiment.
One of the primary drivers of Bitcoin price movements is supply and demand. Bitcoin is a scarce asset, with a maximum supply of 21 million coins that can ever be mined. As demand for Bitcoin increases, particularly from institutional investors or individuals seeking to hedge against inflation or currency devaluation, the price of Bitcoin can rise.
Additionally, global economic conditions can play a role in Bitcoin price movements. When traditional financial markets experience volatility or instability, investors may turn to alternative assets such as Bitcoin as a store of value. Similarly, when global economic conditions are strong and investor sentiment is positive, Bitcoin prices may rise due to increased demand.
Another factor that can influence Bitcoin prices is regulatory changes. Governments and regulatory bodies may implement policies that affect the use or acceptance of Bitcoin, which can in turn impact its price. For example, if a government were to ban the use of Bitcoin, this could significantly decrease demand and cause prices to fall.
Lastly, investor sentiment and market psychology can also play a role in Bitcoin price movements. When investors are optimistic about the future potential of Bitcoin, they may be willing to pay higher prices for the asset, driving up its value. Similarly, when negative news or sentiment surrounding Bitcoin emerges, investors may sell off their holdings, causing prices to decline.
Overall, the complex interplay of supply and demand, global economic conditions, regulatory changes, and market sentiment all contribute to the often volatile and unpredictable movements of Bitcoin prices.
Let’s Talk About Ethereum Prices Now
Ethereum Sharks Ethereum shark addresses are driving the Price and may have been responsible for the most recent rally, claims Sentiment. According to a report shared on Twitter by Santiment, these accounts have been ETH-accumulating at an accelerated rate over the past nine months while holding between 100 and 10,000 coins.
These shark addresses increased their holdings by 2.27 million coins, or $4.2 billion. With the addition of roughly 1.4% of the total ETH supply, this accumulation increased their holdings to a record high for the past year.
Any digital asset subject to such an accumulation trend may experience bullish implications, and ETH may have been one of them. The price of ETH was able to break above $1,900, which was a new nine-month high for the cryptocurrency, as their holdings reached a new one-year high, and it has been holding steady above this level ever since.
What Else Could Be Responsible for the Rise in ETH?
Another factor for the increase, besides sharks hoarding ETH, might be the expectation of the upcoming Shapella upgrade. Stakeholders on the Ethereum network will be able to withdraw their staked ETH thanks to this upgrade, which hasn’t been possible since the Beacon Chain was introduced.
However, for one straightforward reason—more ETH entering the market again—the upgrade may very well be a “buy the rumor, sell the news” event. Realistically, it is anticipated that some of the ETH stalkers who can withdraw will end up on exchanges as they attempt to profit. But given that the price of ETH has fallen considerably from its all-time high, it is likely that many will leave their staked ETH in place while they wait for higher prices.
Conclusion
The coins that do reach exchanges, however, will exert selling pressure on the asset, which is likely to cause a price drop and allow investors to secure profits from their holdings. An excellent illustration is the Cardano Alonzo upgrade, which saw the price of ADA rise to new all-time highs before the upgrade and then fall sharply after it was finished.
Nevertheless, ETH is still experiencing solid growth as of the time of this writing, trading for $1,910.
