While bitcoin has captured the limelight in the past few weeks as it surged to a new record high, another major cryptocurrency, ether, has been enjoying its own meteoric rise.
Launched in 2015, ether, also known as ethereum, is by far the second-largest digital currency in terms of total value, now estimated at more than US$460 billion.
Along with other cryptocurrencies including Solana and Dogecoin, it benefited from the regulatory approval in the US of a new bitcoin investment product, the exchange traded fund (ETF) in mid-January, CoinShares International Ltd research head James Butterfill said.
Photo: Bloomberg
These ETFs allow investors to profit from any change to the price of cryptocurrencies without having to buy them directly, while also letting them sell at any time.
The launch of crypto ETFs has led to an influx of new money, sending bitcoin to a fresh record on Friday of US$70,085.
Bitcoin’s rise has been well-documented, but ether’s has been even more impressive, surging almost 72 percent year to date in comparison with bitcoin’s 61 percent rise.
This strong performance is largely due to “expectations that an ethereum ETF could be approved in the United States,” Kaiko senior analyst Dessislava Aubert said.
Several asset management companies have applied for authorization from the US financial markets regulator, the Securities and Exchange Commission (SEC), to market these ether investment products.
The SEC must rule on the first such applications, from VanEck and Ark 21Shares, by May 23 at the latest.
“Ethereum has started to wake up as investors are anticipating a potential approval,” crypto consultancy MN Trading founder Michael van de Poppe said, adding that “people are rotating from bitcoin to ethereum as a potential investment opportunity.”
Beyond the ETF effect, the digital currency dreamed up by Russian programmer Vitaly Buterin has several other cards up its sleeve.
For cryptocurrency exchange eToro analyst Simon Peters, ethereum is also buoyed by the prospect of “Dencun,” a major upgrade to the technology underlying this digital currency, scheduled for March 13.
This major change would improve transaction processing capacity and cut transaction costs, but also has the potential to unleash the growth of an ecosystem with multiple applications.
“Bitcoin’s primary use is as store of value, while ethereum has much more potential use cases,” Peters said.
For example, it is the destination of choice for non-fungible tokens (NFTs) — the certificates of digital authenticity that caused such a stir three years ago.
The two cryptocurrencies are not in direct competition, because bitcoin is “hard money,” while ether “is basically an investment for the entire blockchain and smart contract ecosystem,” Van de Poppe said.
Ethereum has already successfully negotiated two major technical transformations in the past few years, including the switch to a less energy-intensive system in September 2022.
James Butterfill said there is “increasing optimism” that a “Dencun” upgrade would “go without a hitch,” which would reinforce the currency’s credibility.
He added that ether, by the very nature of its operation, offers the “added benefit” of interest generated by its holders.
The mechanism for creating this currency involves owners putting up existing ether coins as collateral in a process known as “Proof of Stake,” which differs from bitcoin’s energy-intensive method involving highly complex calculations, known as “Proof of Work.”
Ether investors who agree to put up some or all of their holdings receive a fee of a few percent a year, in addition to any potential capital gain if the currency appreciates in value.
The “Proof of Stake” process adopted in September 2022 has significantly increased the amount of ether used as collateral, Peters said, currently at 21 percent compared with just 10 percent 18 months ago.
“There is less ethereum in circulation,” he said, adding: “If demand increases, given the squeeze in supply, then price should follow.”
“I think that ethereum is going to be outperforming bitcoin,” Van de Poppe said, adding that the total market capitalization of ethereum could end up exceeding that of bitcoin.
United Microelectronics Corp (UMC, 聯電) expects its addressable market to grow by a low single-digit percentage this year, lower than the overall foundry industry’s 15 percent expansion and the global semiconductor industry’s 10 percent growth, the contract chipmaker said yesterday after reporting the worst profit in four-and-a-half years in the fourth quarter of last year. Growth would be fueled by demand for artificial intelligence (AI) servers, a moderate recovery in consumer electronics and an increase in semiconductor content, UMC said. “UMC’s goal is to outgrow our addressable market while maintaining our structural profitability,” UMC copresident Jason Wang (王石) told an online earnings
Gudeng Precision Industrial Co (家登精密), the sole extreme ultraviolet (EUV) pod supplier to Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), is aiming to expand revenue to NT$10 billion (US$304.8 million) this year, as it expects the artificial intelligence (AI) boom to drive demand for wafer delivery pods and pods used in advanced packaging technology. That suggests the firm’s revenue could grow as much as 53 percent this year, after it posted a 28.91 percent increase to NT$6.55 billion last year, exceeding its 20 percent growth target. “We usually set an aggressive target internally to drive further growth. This year, our target is to
The TAIEX ended the Year of the Dragon yesterday up about 30 percent, led by contract chipmaker Taiwan Semiconductor Manufacturing Co (TSMC, 台積電). The benchmark index closed up 225.40 points, or 0.97 percent, at 23,525.41 on the last trading session of the Year of the Dragon before the Lunar New Year holiday ushers in the Year of the Snake. During the Year of the Dragon, the TAIEX rose 5,429.34 points, the highest ever, while the 30 percent increase in the year was the second-highest behind only a 30.84 percent gain in the Year of the Rat from Jan. 25, 2020, to Feb.
Cryptocurrencies gave a lukewarm reception to US President Donald Trump’s first policy moves on digital assets, notching small gains after he commissioned a report on regulation and a crypto reserve. Bitcoin has been broadly steady since Trump took office on Monday and was trading at about US$105,000 yesterday as some of the euphoria around a hoped-for revolution in cryptocurrency regulation ebbed. Smaller cryptocurrency ether has likewise had a fairly steady week, although was up 5 percent in the Asia day to US$3,420. Bitcoin had been one of the most spectacular “Trump trades” in financial markets, gaining 50 percent to break above US$100,000 and
RSS