Between the ups and downs of Bitcoin price, Ether (ETH), which has been ranked second in the cryptocurrency market, is recently ushering in its own “sea of stars”.
In the early morning of May 7, the price of Ether broke through the $3,600 barrier, and its market value exceeded $400 billion, once again setting a new historical high. According to the data, Ether’s current global market capitalization has risen to the 17th place, surpassing Wal-Mart ($395 billion) and only behind Johnson & Johnson ($439.9 billion) and Samsung ($434.9 billion).
As the leading cryptocurrency, Bitcoin’s market fluctuations have been regarded as the vane of the crypto market. Previously, as bitcoin stood at the $60,000,000 mark for the first time, ethereum followed suit and broke through $2,000. Then the market ushered in a round of pullback, and Ether also fell back from above $2,000.
However, due to multiple factors such as regulation, the recent bitcoin price continues to shake, while the previous many times with the rise and fall of Ether, recently seems to have “their own ideas”.
The market data shows that under the trend of bitcoin falling 3.49% in the past 1 month, ethereum is out of the market increase of 61.6%. So far this year, Ether has risen 360%.
Why can Ether come out of such an independent market recently?
Bitinfocharts data shows that the average daily active address of Ether has increased from 500,000 to 900,000 in the past year.
Unlike the “cryptocurrency” nature of Bitcoin on-chain transactions, Ether is more focused on the “platform” nature. Just like running various programs on Windows system, based on Ether, users can create various decentralized applications, publish smart contracts, issue their own cryptocurrencies, etc.
The rich blockchain application ecology also allows Ether to release enough market vitality, among which the most remarkable projects are DeFi, the dark horse application in 2020, and NFT, which exploded this year.
DeFi, or decentralized finance, is an application that provides financial services without relying on traditional centralized financial institutions. Currently, the majority of DeFi applications are built on the Ethernet mainnet.
Some data show that as of May 6, the net locked position (NVL, or the net amount of assets held by the DeFi protocol) of DeFi projects on Ether has increased to $87 billion from $14.4 billion at the beginning of the year. When placed in the traditional financial markets, this volume is second only to the fifth largest U.S. bank, Hopewell Bank ($90.9 billion), and higher than Chicagoland ($73 billion).
These “collateral assets” locked in DeFi are used in a variety of agreements, from simple loans to complex derivatives, which allow users to place a variety of bets in the crypto market. All these operations have undoubtedly greatly increased the demand for ethereum in the market.
This year’s popular project, NFT (Non-Homogenized Pass-Through), is another endogenous driving force for the prosperity of the ethereum ecosystem. From the technical point of view, NFT is based on Ethernet protocols ERC721 and ERC1155 (reporter’s note: two Ethernet network technology standards), and almost all NFT works created and their transactions depend on the main Ethernet network to complete.
Market data shows that the NFT market has exceeded $2 billion in transaction volume in the first quarter of this year. Both the artists who get their works completed on the main network and the players who want to buy NFT works need to use Ether. The NFT painting by American digital artist Beeple, which was sold at a sky-high price of $69.34 million, thus attracting worldwide attention, was auctioned for billing and final payment using Ether at the end. It can be said that NFT, which was born from Ether, has in turn fed the former.
In addition to the prosperity of Ether’s own ecology, external dynamics are also supporting its price trend.
Last week, there was market news that the European Investment Bank (EIB) was planning to issue digital bonds worth 100 million euros ($121 million) using the ethereum network. Although it has not been officially confirmed, it also indicates to a certain extent that the traditional financial world is deepening its acceptance of Ether, which is undoubtedly a boon for Ether.
In addition, the recent implementation of the controversial “EIP-1559” proposal has also significantly supported the price of Ether. After the implementation of EIP-1559, the basic transaction fees paid by users will be destroyed, which significantly enhances the value capture of Ether.
Similar to all the investment logic, the high price of Ether has reaped the attention of a group of institutions. Mito has previously bought a total of 31,000 units of Ether on two separate occasions, which is currently valued at approximately $110 million. Last month, while the U.S. SEC was still wavering on bitcoin ETFs (exchange-traded open-ended index funds), Canada was already the first to launch three ethereum ETFs.
As ethereum continues to set new all-time highs, bitcoin’s reign over total cryptocurrency market capitalization is declining, falling below 50% for the first time since August 2018 and now stands at 42.9%. Ether, on the other hand, has steadily risen over the same period and now accounts for 16.3% of market capitalization.
But the other side of the “highlight story” is that the boom in the endogenous ecosystem has also caused a surge in activity on the Ether network, with network congestion and soaring GAS fees (similar to transaction fees).
Despite the recent hard fork upgrade of the main Ethernet network called “Berlin”, Zhang Ming said that the upgrade plan has been implemented. For example, the full implementation of EIP-1559 is expected to be realized by the end of 2021, while the Rollup-based Layer 2 solution is expected to be implemented gradually from the second half of this year, and the ecological migration will take a long time.
Posted by:CoinYuppie，Reprinted with attribution to:https://coinyuppie.com/market-capitalization-surpasses-walmart-ranked-17th-in-the-world-how-does-ether-come-out-of-the-independent-market/
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