Ethereum (Eth-USD) set a new record for another consecutive day on Thursday, leading at least two macro themes ending in the cryptocurrency sector.
The second largest cryptocurrency exchanged above $ 4,600 before filling these earnings, but recorded records during last week-thanks in part to the growing popularity of non-fascinable tokens (NFT) and decentralized finance projects (DEFI). In the past year, Ether has surpassed Bitcoin, earning more than 1025%.
These factors have stimulated short-term demand for payment of transaction costs in the digital part, as well as increasing speculation on its value for the so-called metavese. This last development is approaching chain speed, now that Facebook (FB) has renamed in an aggressive push to look into the next phase of digital development.
Solana (Sol1-USD), another cryptocurrency similar to Ethereum, also jumped on Wednesday at new heights of all time with a gain of almost 31% last week. The two movements follow an investment frenzy for NFT or non -butties.
Only 9% this week, ETH could have even more short -term observation, according to Fundstrat Global Investment Advisors.
“Ethereum should always reach up to $ 4,951 with little or no resistance,” wrote Fundstrat Global Investment Advisors on Wednesday. Ether’s relative force index (RSI), the technical gauge of the purchase of the momentum, shows that the price has managed to run more without becoming significantly exaggerated.
Everyone hears about Ethereum in a way that has never occurred before because of the NFT. People are excited by NFT, “David Hoffman, podcast host “Bankless”
Ether’s underlying blockchain, Ethereum, is the most established decentralized blockchain protocol in the world (or “layer 1” in technical terms) for intelligent contracts in the world.
Although he does not receive the same investors’ request as Bitcoin (BTC-USD), Ether often serves as a “next trip to the Digital Asset Rabbit hole” “according to Chris Matta, President of Digital Asset Manager, 3iq Digital . His company has offered both a Bitcoin (ETF) Bitcoin fund based in Canada as well as the Ether equivalent for several years.
Unlike Bitcoin, which is mainly used as a reserve of value, prices overvoltage in ether is due to the growing demand of people to use its blockchain to transform. Like fuel in a car, Ether acts like gas that propels transactions to its payments network.
The cost of transactions (or gas costs) varies depending on the size of a transaction and how the congested network remains at any time.
The majority of the protocols DEFI and the NFT live above the Ethereum blockchain. Together, these two grass digital active segments have created an increasing demand for transactions or “block space” in Ethereum.
In November, there are 219 billion dollars of total locked value (TVL) in decentralized finance or DEFI. During the same period of time, NFTS trade amounted to $ 4.2 billion According to Dappradar.
“The demand for block space continued to increase and the flow of transactions has not been able to increase with this request. You see the prices of gases increase considerably as people fight for the block space. This results in a real increase in the demand for ether, “Matta told Yahoo Finance.
Although large in the short term, this growing demand for ether also poses a long -term problem for assets.
“Ethereum is struggling a little at the moment under the amount of its network activity. Gas fees can vary considerably and there is now competition with other blockchains that offer lower transaction costs, “said Matta.
Standard gas costs on various protocols DEFI vary considerably but crypto exchange crypto.com prices currently average transactions between $ 111 and $ 170 per transaction.
Hands holding a tablet computer are represented during a tour by the NFT urban laboratory entitled “Game Over” by the group of artists Die Dixons (alias XI of Sign) in Berlin, Germany, October 6, 2021. Reuters / Annegret Hilse ·Annegret Hilse / Reuters
Ethereum’s price also arises from the last wave of interest of investors for NFT, which has started to attract the attention of major American consumption brands and pop culture icons.
“Everyone hears about Ethereum in a way that has never occurred before because of the NFT. People are excited by the NFT, ”said David Hoffman, an Ethereum Taurus and co-animator of the Podcast focused on crypto.
One of the warmer boundaries in the cryptography sector, NFT serves as crypto-and authenticity certificates for a variety of digital products, art and music albums with collectibles and video game active .
Recently, major brands have jumped on the market. This week, the fast food giant, McDonald’s (MCD) created a competition to give NFT of their McRir sandwich while Nike (NKE) laid For a patent, the signaling plans to launch digital versions of their sneakers and their clothes in the form of NFTS.
For these brands, the NFT act as “digital goods”, explained Hoffman, most of them are always created on Ethereum as a form of ERC-721 token of the blockchain.
And the frenzy has only accelerated this month thanks to the Facebook’s official change of brand to Meta, which positions the company to propel investments in the creation of the “metavers”, a more immersive version of the Internet.
NFTS will play a central role in the metavese, said Hoffman and Matta. This means that ETH and other cryptocurrencies propelling intelligent blockchains based on contracts like Solana act as the underlying basic layer for the speculation of investors on the metavers.
“Ethereum is an infrastructure and the ETH is metovers,” added Hoffman.
David Hollerith covers cryptocurrency for Yahoo Finance. Follow him @Shollers.
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