Analyst explains why Ethereum rallies and hits historic highs – bitcoin news
Investment management firm Ark Invest has highlighted three reasons why the price of ethereum has reached record highs. The company cited increased institutional interest, strong on-chain signals and impending protocol upgrades as the main reasons.
Why Ethereum rose
ARK Investment Management, also known as Ark Invest, released a research note last week explaining three main reasons Ethereum is reaching all-time highs.
The first reason mentioned by the analyst at the firm was “increased institutional interest”. Ark Invest pointed out that a number of ether exchange-traded funds (ETHs) have been launched in Canada, making it easier for institutional investors to gain exposure to ETH prices. The note adds:
Institutions and companies like the European Investment Bank and Visa have validated the Ethereum blockchain by announcing issuance and settlement use cases, respectively.
At the end of April, the European Investment Bank (EIB), a non-profit organization and lending arm of the European Union, announced that it had issued a new type of digital bond built using Ethereum . Meanwhile, payments giant Visa announced at the end of March its first transactions settled with Visa in USD Coin (USDC) and carried out via the Ethereum blockchain.
The price of ETH hit another record high on Sunday night. It is currently $ 4,116 according to market data Bitcoin.com.
The second reason mentioned by the analyst was “strong signals on the channel”. The firm explained, “The use of the Ethereum network is increasing and, by some measures, exceeds that of Bitcoin, as shown by the number of active wallets and total transaction fees,” adding:
In our opinion, decentralized finance (Defi) and non-fungible tokens (NFT), both on the rise, explain Ethereum’s recent breakthrough.
The third reason is related to the next updates of the protocol. Noting that Ethereum’s improvement proposal 1559, which is slated for July, will significantly change Ethereum’s transaction fee model, the note details:
In an effort to reduce Ethereum’s fee volatility, EIP-1559 introduces a mechanism to burn off certain transaction fees, hampering supply flow and introducing deflation into the Ethereum ecosystem. The impact on the price of ether could be similar to that associated with a Bitcoin halving event.
What do you think of Ark Invest’s explanation of why the Aether rallied and reached unprecedented heights? Let us know in the comments section below.
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