Ethereum, the world’s second-largest cryptocurrency, broke the $4,000 ceiling to reach a new record high on May 9, buoyed by investors betting that its price will reach $10,500 by the end of the year.
In a dazzling rally that outshone the bigger Bitcoin so far this year, Ether broke through the $3,000 level just last week on the Bitstamp exchange, up 325 percent for the year and easily outpacing a 95-percent rise in the more popular bitcoin. ETC almost doubled during the past week alone, along with other altcoins, while bitcoin lagged, rising just 0.65 percent during the same period.
“We’re maintaining our overweight Ethereum vs. bitcoin recommendation from April 2020,” investment research firm Fundstrat wrote in a note. Fundstrat also said it expects bitcoin to reach $100,000 this year and the total cryptocurrency market cap to reach $5 trillion.
“The crypto narrative is shifting from Bitcoin to Ethereum and other segments like DeFi (decentralized finance) and Web 3.0 apps,” according to Fundstrat.
David Grider, the head of digital assets research at Fundstrat, has set year-end price target of $10,500 for Ether.
“Ethereum is on pace to grow at 554 percent during 2021,” Grider wrote in a Jan. 19 research note.
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Ethereum – referred to as Ether in short – is considered the biggest challenger to Bitcoin’s claim to the throne of cryptocurrency.
Ether proponents believe it will catch up to bitcoin within the next six years if it continues to outperform as it has done in the past. Analysts believe it will be of even greater use in a decentralized future financial system.
The digital asset’s popularity is embedded in its position as the blockchain of choice for many products and services that use DeFi – or decentralized finance – applications. Transactions on the Ethereum blockchain hit a record high of 41.7 million in April.
James Quinn, managing director at Q9 Capital, a Hong Kong cryptocurrency private wealth manager, told Reuters the big Ether rally is a catch-up to late 2020 gains in Bitcoin.
“At first, the rally was really led by bitcoin because as a lot of the institutional investors came into the space, that would be their natural first port of call,” Quinn said.
“But as the rally has matured over the last six months, you have DeFi and a lot of DeFi is built on Ethereum.”
Ethereum was trading at $4,043.40 as of this writing.