The innovative crypto currency Ethereum has reached an all-time high of $415 on the 23rd of November indicating that the currency is here to stay. Commentators and financial analysts are predicting that Ethereum could rise to figures of 600-800 dollars over the next few months and the strength of its transaction base certainly makes that seem like a distinct possibility.
With its recent surge in price, the market valuation of Ethereum has moved closer to the $40 billion mark, a market cap that is larger than seven of the 10 largest cryptocurrencies in the market combined, with the exception of bitcoin and Bitcoin Cash.
The demand for Ether has been evenly distributed across two major markets, South Korea and the US. South Korea’s Bithumb, the largest cryptocurrency exchange in the world by trading volume, has accounted for nearly 15 percent of Ether trades over the past 24 hours.
Alternative cryptocurrencies (altcoins) in the market tend to follow the price trend of Ether. As the price of Ether surged from around $380 to $415, other altcoins followed. The vast majority of altcoins in the market recorded significant gains, especially Bitcoin Cash, Litecoin, and Monero.
On average, the Ethereum network settles over 544,000 transactions, which is approximately 52 percent of the cryptocurrency market’s transactions. Bitcoin on average processes 270,000 transactions per day, around 50 percent of the Ethereum network’s daily transaction volume.
The Ethereum network has started to settle more transactions than the Bitcoin network since the execution of the Byzantium hard fork in October. Donald McIntyre, the founder of Etherplan and highly regarded Ethereum analyst, noted that the demand for Ethereum as a settlement network has increased, primarily due to the increase in transaction fees of the Bitcoin network.
Although transaction fees on the Bitcoin network have significantly declined since October, due to SegWit and the restructuring of the global bitcoin and Bitcoin Cash hash rate, wallet platforms such as Blockchain and Coinbase recommend a fee of around $0.8 for non-SegWit transactions, which is around 9x more than the recommended fee for Ethereum transactions.
As CCN reported, Blockchain, the second largest wallet platform behind Coinbase, has announced that it intends to integrate SegWit by early 2018. Still, until then, it is not possible for users on non-SegWit wallet platforms to experience nearly 35 percent reduction in fees.
The relatively slow adoption rate of SegWit and network instability of other blockchain networks like Bitcoin Cash have ultimately led to the increase in demand for Ether. As such, Ethereum has begun to settle significantly more transactions than other leading blockchain networks.
With significant progress being made with open-source scaling projects like Plasma and Sharding, strong community of conglomerates within the Enterprise Ethereum Alliance, and the integration of innovative cryptographic systems such as ZK-SNARKs, the market remains optimistic in the mid-term future of Ethereum in terms of technology advancement, adoption, and rise in the popularity of decentralized applications.
Bitcoin to reach $9,000 by end of the month?
The bitcoin price achieved a new all-time high at $8,380 earlier this week. Analysts including Bitfury vice chairman George Kikvadze stated that all indicators point towards strong short and mid-term momentum for bitcoin.
“Buying even more bitcoin at $8000. All indicators are super positive. Most positive they ever been,” said Kikvadze.
Throughout November, Kikvadze revealed that he has met 30 large-scale institutional investors and retail traders. Out of the 30 investors, 12 are in the process of investing in bitcoin, 10 plan to invest in bitcoin in the short-term, and eight remain undecided.
Earlier this week, Kikvadze explained that multi-billion dollar hedge funds, institutional investors, and retail traders are planning to enter the bitcoin market by the end of 2017, given the increase in the liquidity of bitcoin over the past few months. Today, bitcoin is more liquid than the most liquid stock on earth that is Apple, and process larger daily trading volumes than many of the world’s major stock exchanges.
In fact, Bithumb, the South Korean cryptocurrency exchange, processed more trades in one day than the South Korean stock market KOSDAQ, in August of this year.
“One of the investors: ‘Entering Bitcoin investment at $100 billion much much easier than at $10 Billion,’” added Kikvadze.
It has become significantly challenging for institutional investors and investment firms to dismiss bitcoin as an emerging and a rapidly growing currency, store of value, and safe haven asset. Earlier this year, JPMorgan CEO Jamie Dimon vowed to fire any trader within the company who decides to deal with bitcoin and trade the digital currency on behalf of clients, even after it was discovered that several JPMorgan Securities custodian accounts processed bitcoin trades via the Nordic Nasdaq (Sweden) exchange’s XBT Provider, a bitcoin exchange-traded fund.
Even for JPMorgan, it is not possible to dismiss or ignore the bitcoin market, as the demand from institutional and retail investors is simply too large, and is growing exponentially. As such, as Wall Street Journal reported, JPMorgan traders will begin trading bitcoin futures later this year.
“J.P. Morgan is considering whether to provide its clients access to CME’s new bitcoin product through its futures-brokerage unit,” the WSJ report read, citing sources familiar to the matter within the company.
The market’s optimism regarding the entrance of large-scale investors has already had a major impact on the short-term price trend of bitcoin. As institutional investors officially move into the bitcoin space after the December 11 launch of CME’s bitcoin futures exchange, it will inevitably lead to a domino effect, in which individual investors and organizations rush into acquiring bitcoin as billions of dollars flow into the market.
In the long-term, while there may be minor corrections on the way, the movement of large capital into the bitcoin market will be highly beneficial for the industry, as the liquidity of bitcoin grows and the market matures.
The market’s enthusiasm towards the performance of bitcoin in December would likely push the price of bitcoin to $9,000 in the short-term, even by early December, given that there exists no uncertainty concerning protocol upgrades or hard forks.