Why do many investors consider Ethereum to be the proxy for the alternative cryptocurrency market?
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Answer Why do many investors consider Ethereum to be the proxy for the alternative cryptocurrency market?
The price of Ethereum has increased by more than 13 percent compared to last week.
At press time, Ethereum is trading above the $3900 level, after the coin hit 4000 above the previous day.
The market capitalization of the largest alternative has exceeded $450 billion, another record recently set by the coin.
Highlighting the position of Ethereum in the market, Joshua Frank, CEO of The Tie, a crypto-focused data company, stated:
Many investors consider Ethereum to be a proxy for the altcoin market…The volume of tweets about Ethereum over a 24 hour period recorded 59,000 tweets, which is unbelievable, with Ethereum continuing to rise to all-time highs.
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The number of Ethereum transactions recently reached a record high of 60,471 transactions, while the previous high of 60,456 transactions was recorded over two weeks ago, exactly on April 23.
The rise of Ethereum began to accelerate after the upgrade to the “Berlin Update” that took place on April 15.
Besides, the growing popularity of non-fungible digital tokens (NFTs) and DeFi have also contributed to the rise in the price of Ethereum.
Flora Sun, director of Binance X, commented:
There are a lot of innovations in DeFi protocols these days.
DeFi still offers a much higher return than traditional finance, so it is only natural that it attracts a lot of liquidity to the crypto market.
A low balance of ETH on the exchanges means a bullish sign, as it will translate into a decrease in supply, thus providing an additional bullish catalyst for the altcoin.
The development of the “EIP-1559” protocol expected from Ethereum and the “London” update that is scheduled to follow in July this year are also likely to affect the price of Ethereum.
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Emphasizing this, Eric Anziani, COO of Crypto.com, said:
This upgrade will start burning transaction fees, which will naturally reduce the rate of inflation of Ethereum.
If network usage is high enough, Ethereum could become deflationary.
This is a very bullish development that the market is just beginning to price.
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