Ether hit an all-time high on Thursday as Bitcoin’s dominance in the cryptocurrency market weakened.
According to Coin Metrics, the world’s second largest digital currency by market value hit a new all-time high of $ 2,774 on Thursday morning. Bitcoin, the first digital currency, dropped slightly to $ 54,471.
The move comes after the European Investment Bank announced on Wednesday that it had issued its first digital bond on the Ethereum blockchain, the underlying network of the ether. The announcement sparked rumors that the currency would become popular with traditional financial institutions.
Most of the major cryptocurrencies were trading higher on Thursday, helped by the rise in Ether. Bitcoin has dropped about 16% from its all-time high of nearly $ 65,000 earlier this month. However, it has shown an impressive revival, growing by almost 90% since the beginning of the year thanks to increased interest from institutional investors and companies.
At the same time, some investors have warned of the runaway cryptocurrency market. Dogecoin surged on Wednesday following tweets from celebrities such as Elon Musk and Mark Cuban.
And many other altcoins have risen this year as well. According to CoinMarketCap, this led to Bitcoin’s dominance in the cryptocurrency market falling below 50% last week, for the first time since August 2018.
For the first time, the market share of bitcoins fell below this level in 2017, before the huge collapse in cryptocurrency prices, which is now called “crypto winter“. But bulls Bitcoin is arguing that things are different this time around as growth is driven by institutional demand, not retail investors.
“There is so much excitement from the institutions that are part of“Said Carol Alexander, professor at the University of Sussex School of Business. “Bitcoin is a kind of benchmark, the currency of the cryptocurrency. I think demand will be strong as institutional investors become more confident in the market.“
“However, in terms of retail, which was in bitcoin, this is no longer cool.“Alexander added. “Everyone knows Bitcoin and we need something to talk about. We don’t want to talk about Covid all the time. This is largely due to market psychology. We were locked inside with nothing to say.“
Crypto skeptics say bitcoin and other digital coins are a speculative bubble. Stephen Isaacs, chairman of the investment committee of financial advisors at Alvine Capital, said earlier this month that he believes Bitcoin is in “bubbleWhich will burst out citing the risks of regulation and climate change.
Ethereum vs Bitcoin
Ethereum may come after Bitcoin, but there are several key differences between the two. First, Ethereum has several software developers who build applications on its network. Ether is the native token of the Ethereum blockchain.
Popular trend in “decentralized applications“These are NFT or non-fungible tokens, digital assets believed to represent ownership of rare virtual objects such as art and sports memorabilia. Most NFTs are based on Ethereum.
Ethereum is also undergoing a major upgrade that diverts it away from bitcoin, theoretically allowing for shorter transaction times and less energy required to process transactions. Bitcoin networks and ether have drawn criticism from environmentalists for the climate impact of cryptocurrency mining.
“After the network upgrade, Ethereum, in particular, is proving to be useful, and with the buildup of developers on the platform, it should come as no surprise that it attracts investors so strongly.“Said Simon Peters, Crypto Assets Analyst at eToro, an online trading platform.
“Institutional investor demand is fundamental. While they may now have some impact on bitcoin, institutions are diversifying their options and Ethereum is the next natural choice, and this leaves the second largest crypto asset by market cap well positioned to generate more value.“