Ether, the second-largest cryptocurrency by market value, has more than doubled in value this year, leaving bitcoin, the crypto market leader, far behind.
- Ether is trading near $275 at press time, representing a nearly 114% gain on a year-to-date (YTD) basis, according to CoinDesk’s Ether Price Index.
- The cryptocurrency clocked a five-month high of $289 on Thursday despite increased exchange inflows.
- Ether’s YTD rise is over three times bigger than bitcoin’s 34% 2020 rally.
- Bitcoin, the top cryptocurrency by market value, is currently trading around $9,550.
- Jehan Chu, co-founder and managing partner at Hong Kong-based trading firm Kenetic told CoinDesk that ether’s price is surging on increased general interest and the network's popularity in the decentralized finance space.
- Ethereum’s median transaction fee recently rose to its highest level since August 2018 due to a surge in transaction activity.
- Additional buying pressure for ether looks to be stemming from the excitement surrounding the impending transition from the proof-of-work mechanism (aka mining) to proof-of-stake in the network's next big upgrade, dubbed Ethereum 2.0.
- Staking would allow investors to earn additional yield simply by holding ether to support the operations on the blockchain.
- Glassnode data shows the number of addresses holding 32 ETH – the minimum balance needed to become a validator on Ethereum 2.0 – has increased by more than 12% this year, suggesting increased investor interest in the novel form of income.
- While bitcoin was expected to print solid gains following the May 12 miner reward halving event, the cryptocurrency has remained largely stuck in a range between $9,000 and $10,000.
Disclosure: The author holds no cryptocurrency at the time of writing.