Why has the price of ethereum gone up?
The latest wave of ethereum was linked to the demand for non-fungible assets – which are a kind of digital certificates of authenticity. These tokens, also known under the acronym NFT, became popular after the firms Sotheby’s and Christie’s auctioned these tokens of works by well-known artists in the digital world.
To put it in perspective, in 2020 alone, the market value of NFT amounted to 338 million dollars, an increase of 138.8% compared to the previous year, according to the Non Fungible Tokens Yearly Report of the specialized site NonFungible with the collaboration of L’Atelier, the technology and innovation unit of the BNP Paribas financial group. This report pointed out that the majority of these transactions are carried out through ethereum.
Another engine that has driven ethereum’s market value has been the decentralized finance (DeFi) ecosystem, which brings together a number of financial services for virtual asset holders. This market has gone from about $ 18 billion at the end of 2020 to $ 178.896 million at the beginning of December, according to Coinmarketcap.
These characteristics of ethereum make some of the investors feel more attracted to this crypto, instead of others such as bitcoin or dogecoin -which came as a joke and is now used basically for speculation-. “Ethereum is a cryptocurrency based on a technology that could impact the most,” said Pierre Savarzeix, equity manager at Seeyond, a subsidiary of asset manager Natixis IM.
Even so, Savarzeix himself and institutional asset managers, such as Franklin Templeton, warn that caution should be exercised since cryptocurrencies have volatility “inscribed” in their DNA and, in the case of ethereum, it is still necessary to prove that they have scalability .