Ethereum (ETH) has long sat in the shadow of leading cryptocurrency Bitcoin (BTC) —but that might be changing. Even amidst a strong 2021 for Bitcoin that has seen the price of the coin nearly double since the start of the year, Ethereum has enjoyed even more dramatic gains, especially lately.
Today (May 12), the price of Ethereum set a new all-time high of $4,357, according to CoinGecko (opens in new tab), and that bar has been raised time and again in recent weeks. Ethereum’s price is up nearly 30% just in the last week, and has almost doubled over the past 30 days alone. At a result of the new peak, Ethereum briefly crossed a $500 billion total market cap for the first time today.
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Granted, Ethereum still lags behind Bitcoin in a number of key metrics. The price of ETH currently sits at $4,104 as of this writing, whereas the price of Bitcoin is currently $54,767 (opens in new tab), about 15% below its all-time high set about a month ago. Its market cap, meanwhile, is more than double that of Ethereum, at just over $1 trillion.
Indeed, Ethereum may never match the per-coin price of Bitcoin, which has a much more limited supply and is seen as “digital gold” — a long-term store of value — by many investors. But when it comes to recent gains, investors have seen a much larger return from ETH than BTC.
While Bitcoin’s current price is about 86% higher than it was on January 1 ($29,352), Ethereum has more than quadrupled the $730 price that CoinGecko (opens in new tab) reported at the start of the year. Bitcoin only passed a $500 billion market cap valuation back in December, so a lot can happen in a little bit of time in a blazing market like this — and Ethereum is still surging, while Bitcoin has cooled off in recent weeks.
Bitcoin and Ethereum have grown hand-in-hand over the years, but lately, Ethereum’s wider functionality and optimism about enhancements ahead may be driving demand.
Ethereum is a smart contract blockchain platform that is used for a growing array of decentralized applications, particularly decentralized finance (DeFi), which currently has nearly $90 billion in total value locked within contracts (via DeFi Pulse (opens in new tab)). It has also benefited from this year’s explosion in interest and money poured into non-fungible token (NFT) collectibles, including things like rare artwork, video clips, and other verifiably scarce digital items that are tokenized on a blockchain.
Along with increased institutional interest and investment, there are also changes ahead for Ethereum, as well. The biggest is the gradual transformation from its current proof-of-work consensus model — which requires ample computing power, similar to that of Bitcoin — to a more eco-friendly proof-of-stake model in Ethereum 2.0.
That process is underway, but it’s unclear when the long-awaited shift will be completed. A smaller network upgrade dubbed the “London hard fork” is due to roll out this summer; this will alter the way fees work, as well as “burn” more ETH to reduce the supply and potentially make the coin even more valuable.
Even with the recent rise in value, there are potentially further gains ahead in 2021. Crypto analyst Megan Kaspar predicts an ETH price (opens in new tab) of $8,000 to $10,000 by the end of the year, which nears the $10,500 year-end price estimate of David Grider, head of digital assets research at Fundstrat Global Advisors (via Business Insider (opens in new tab)). Grider sees Bitcoin making its way to $100,000 by year’s end, as well.
Disclosure: The author of this story held less than 2 ETH and less than 1 BTC at the time of publication.