In recent months, Ethereum has emerged as the biggest gainer in the cryptocurrency market, seeing its market capitalization increase by more than 500% compared to its value at the start of 2021. Ethereum’s explosive growth, along with that of other leading cryptocurrencies, has been fuelled by a combination of factors, including growing investor interest, global economic uncertainty, and institutional adoption.
Ethereum’s Most Recent Growth
At the close of 2020, Ethereum’s market capitalization was just over $70 billion, with the cryptocurrency trading at around $740 per token. By mid-March 2021, Ethereum had a market capitalization of over $200 billion, with its price having reached an all-time high of approximately $2,000 per token. This represents a more than 170% increase in Ethereum’s value in just three months.
Other key indicators of Ethereum’s growth include its daily trading volume, which has surged to over $30 billion in recent weeks, as well as its growing popularity among institutional investors. For example, in March 2021, the Chinese insurance company, Ping An, invested $15 million in the startup, Conflux, which utilizes Ethereum-based technologies to build decentralized applications.
What Is Driving Ethereum’s Growth?
So, what is driving Ethereum’s impressive growth in 2021? There are a few key factors at play.
Firstly, Ethereum’s technology is becoming increasingly popular and influential. Ethereum is the world’s leading blockchain platform, designed to build and deploy decentralized applications (dApps). These dApps utilize smart contracts and other features of the Ethereum blockchain to create a range of decentralized services. Decentralized finance (DeFi) is one such area that is benefiting from Ethereum’s technology, enabling users to access financial services without the need for intermediaries such as banks.
Another broad factor that is driving Ethereum’s growth is global economic instability. With the COVID-19 pandemic having disrupted global economies and traditional financial institutions struggling to cope, many investors have turned to cryptocurrencies as a safer, more stable investment option. As a result, cryptocurrencies such as Ethereum have seen significant interest from investors who perceive them as ‘digital gold’ and a hedge against inflation.
The institutional adoption of cryptocurrencies is another key factor driving Ethereum’s growth. Over the past year or so, leading financial institutions such as JPMorgan, Citibank, and Goldman Sachs have been exploring the potential of blockchain and cryptocurrencies. This has led to increased institutional investment and significant growth in Ethereum’s market cap.
Moreover, the recent growth experienced by Bitcoin, the world’s leading cryptocurrency, has also helped drive Ethereum’s growth. In 2020, Bitcoin’s market cap grew by more than 300%, reaching its highest value since its inception. This growth has created a positive environment for other cryptocurrencies, including Ethereum, which has been seen as a ‘complementary option’ to Bitcoin.
Will the Growth Continue?
Investment experts predict that the growth experienced by Ethereum in recent months will continue throughout 2021 and beyond. This is due to a number of factors, including the continued adoption of Ethereum-based technologies, the increasing popularity of dApps, and the growth in interest from institutional investors.
Furthermore, Ethereum’s developers have launched a series of improvements to its technology that are designed to make it more scalable, more efficient, and more accessible to developers. One of the most significant improvements to Ethereum has been the launch of Ethereum 2.0, which aims to address some of the scalability issues that were facing the previous version of Ethereum. This has improved the overall performance of the network, making it more attractive to investors.
In conclusion, Ethereum is one of the top-performing cryptocurrencies in 2021, with its market capitalization growing at an incredible pace. The technology behind Ethereum is becoming increasingly popular and influential, enabling developers to create decentralized apps that offer significant benefits to users. With increasing demand from investors, growing institutional adoption, and a wide range of improvements to the technology, Ethereum’s growth is set to continue for the foreseeable future.