Ethereum Prices: Finally Regaining Momentum

Is it a coincidence or a bad April Fool’s Day joke the crypto prices hit their lows on April 1. Since then we have enjoyed encouraging news on the technical front.  Bitcoin seems to be holding around the $8,000 level while Ethereum keeps poking its head above $500. Meanwhile, Ripple is hovering around the $0.70 level.

Ether, the big loser of the first quarter, is turning out to be the star of the major cryptos thus far in April with a 35% gain against Ripple at 25% and bitcoin just a shade under 19%.  And acknowledgement must be given to the many other altcoins that on any given day have turned in leading performances.

It’s only fair to mention that Ripple’s price has had more going for it than the turnaround in the broader cryptocurrency market.  On April 12, Bank Santander announced One Pay FX will be using Ripple-powered blockchain. This allows same-day payments for customers in multiple countries.  Other banks most likely will follow the lead and go with Ripple. Very good news, no question.

The only thing that is unclear is how Ripple will be paid: XRP or fiat currency.  This has been the investment community’s one big rub on Ripple.

Suddenly Good News Everywhere

One of the things to love about investing in cryptocurrencies are the swings in momentum. When so little is known about the future of this technology, everything tends to get interpreted in terms of good news or bad news.

Since April Fool’s Day, the momentum has been starting to go the right way.  No more gloomy news stories about government crackdowns, tightened regulations and all that stuff. Which came first, higher prices or glowing news reports?

Welcome News For Ethereum

The ICO market remains vibrant.  ICO WatchList has reported a record 20 projects working on raising $1.86 billion so far this year.  Of course, $850 million is accounted for by the on again-off again deal for Telegram. Even taking this into account, the average offering size both for projects and offerings completed is far higher than 2017.  This suggest the quality of ICO could be improving.

The Ethereum platform continues to be far and away the choice for startups.  For much of last year, Ethereum accounted for about a 75%-77% share of the ICO market but that continues to rise to more than 80%.

Ethereum’s scaling limitations are getting better headlines.  Both Cardano and EOS position themselves as so called third-generation cryptocurrencies based on their multi-layered blockchains and other features that are both speed and cost effective for the mass of low value transactions that make up global commerce.  Ethereum’s average of about 14 transactions per second must improve or face extinction.

Since Cardano and EOS are more theoretical than operational, Ethereum and its founder Vitalik Buterin have time to fend off the threat.  From the standpoint of ether pricing, Buterin’s downbeat headline catching remarks how “Ethereum apps are being screwed by scaling”  and reports of conflicts at the developers conference in Paris did nothing for investors.

Finally, late last it was reported that Buterin finally got his act together and proposed a solution.  It is referred to as a sharding system that can be compared with Cardano and EOS’ multi-layered blockchain system.

In a sharding system a contract is maintained between two parties on a separate blockchain or shard.  The only time the shard connects with the main blockchain is either to open or close the channel. This could significantly reduce the amount of data consumed in each transaction and increase transaction speeds.  Now the job is getting everyone working together.

Stitching Up The Wounds

Ether was the biggest loser of the major cap cryptocurrencies in the first quarter of 2018 so strong performance thus far in April should not be a huge shock.  For all of the technology involved, mass adoption of bitcoin, ether, Ripple or any other name is a long-term proposition.

In the meantime, we are left with the constant search for a balance between potential and current value.  This is where momentum comes in and what makes cryptocurrency so attractive during this period. Right now that momentum is working in favor of investors and Ethereum is finally acting like a leader.   

Featured image courtesy of Shutterstock. 

 

Author:
James Waggoner is a veteran Wall Street analyst and hedge fund manager who has spent the past few years researching the fintech possibilities of cryptocurrencies. He has a special passion for writing about the future of crypto.