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HomeCryptoCryptocurrency struggling to match the soaring trajectory of the market leader
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Cryptocurrency struggling to match the soaring trajectory of the market leader

Despite being the second-largest cryptocurrency by market capitalization, Ether has seen modest gains compared to Bitcoin’s meteoric rise. In the first quarter of this year, Ether saw a 53% increase, lagging behind Bitcoin’s 65% surge.

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While Bitcoin has reached new peaks, Ether currently trades around $3,612, significantly lower than its all-time high of $4,867.60 in November 2021.

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Even a recent upgrade to the Ethereum blockchain, aimed at reducing transaction fees, failed to generate much excitement outside the crypto community. In contrast, anticipation surrounding Bitcoin’s upcoming “halving” event, designed to slow its supply, has fueled market enthusiasm.

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Following Ethereum’s Dencun upgrade on March 13, Ether experienced a 12% decline, highlighting the market’s tendency to “sell the fact.”

Joseph Edwards, head of research at Enigma Securities in London, notes that Ether struggles with recognition among non-endemic investors, hindering its potential for mainstream adoption.

The fate of Ether’s performance may hinge on the approval of spot Ether exchange-traded funds (ETFs) by the U.S. Securities and Exchange Commission (SEC). Similar approval for Bitcoin ETFs sparked institutional interest and drove Bitcoin to record highs.

VanEck’s Ether ETF filing is awaiting a decision on May 23. Some forecasts, like those from Standard Chartered Bank, predict significant price growth for Ether if ETFs are approved.

However, regulatory uncertainties persist. While Bitcoin is classified as a commodity by the SEC, Ether’s status remains ambiguous. Its operation on a ‘proof-of-stake’ blockchain, coupled with staking practices, raises questions about whether it qualifies as a security.

Anders Helset, head of research at K33, suggests that obtaining SEC approval for staked Ether ETFs will be challenging given the current regulatory landscape.

Institutional demand for Ether has been limited compared to Bitcoin, as evidenced by outflows from digital asset funds tracking Ether. Nonetheless, interest in Ethereum’s technology, which underpins various decentralized applications, remains strong.

Recent initiatives, such as BlackRock’s tokenized fund on the Ethereum blockchain, highlight Ethereum’s potential for broader tokenization of real-world assets.

While uncertainties linger, Ethereum’s role in facilitating the tokenization of traditional assets underscores its significance beyond the realm of cryptocurrencies.

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