Ethereum passes $3,000 setting a new All-Time High
May 3, 2021
Ethereum, the second largest cryptocurrency by market capitalization was trading for just over 300$ in October last year, passing 700$ as the new year began. However it has been rising non-stop following the rest of the crypto market during this bull run, crossing its previous ATH and still continuing to rise exponentially as it rose from $2300 to over $3400 within a week outperforming Bitcoin by over 70% in the last month.
Posting a return of over 1300% in the last year and a total market capitalization of over $352 billion, Ethereum has overtaken many big institutions including the Bank of America and The Walt Disney company in terms of total market cap. The latest push has led to many supporters voicing their views that Ether will eventually flip the king of all cryptocurrencies, Bitcoin, to become the largest cryptocurrency in the world.
Bitcoin's recovery to over $57,000 can be attributed as the main factor leading to the explosive price rise, accompanied by the surge in activity on the Ethereum blockchain and rise in number of active addresses. Another big factor was the European Investment Bank announcing the issuing of a new two year digital bond based on the Ethereum blockchain, worth over $120 million, in collaboration with Goldman Sachs and a few other banking entities. The retail interest in decentralized finance has been rising along with the institutional interest with the total value locked in defi rising above $100 billion recently.
There are several major updates coming to the Ethereum blockchain over the next few months aimed at solving many current issues with the network including high transaction fees and energy intensive mining operations. The closest upcoming update is named EIP-1559 and is supposed to go live on July 14 along with the London hard fork. The update will change the way gas fees works during a transaction as instead of sending the gas fee to a miner it will now be sent to the network itself as a base amount of Ethereum will get burned with an option to include a tip to miners. As expected, this proporsal was met with a large support from users as it will greatly reduce the transaction fees making the mainnet much more efficient and cheaper to use.
Another huge upcoming event is the transition towards Ethereum 2.0 which is supposed to switch the network from proof-of-work(PoW) to proof-of-stake(PoS). PoW blockchain networks require miners to use specialized equipment such as ASIC and graphics cards to compute data required for the creation of a new block in the blockchain. Obviously this procedure is very energy intensive as millions of device are kept running non-stop all day to keep the network functioning correctly. However the new proof-of-stake network is much more energy efficient and promised to significantly lower the transaction fees while also increasing the throughput of the network making it possible to process many more transactions simultaneously.
Looking at the current price action, if Ethereum manages to hold above the $3000 price level it could lead to uptrend resuming with Ethereum looking set to cross the psychological levels of $3500 and $4000. However the RSI and the Stochastic RSI technical indicators show that Ethereum is currently trading in the overbought region and could potentially be looking at a small correction following this week's price surge.