Ethereum (CRYPTO: ETH) is not the largest cryptocurrency out there. That honour goes to Bitcoin (CRYPTO: BTC). But, Ethereum is the second largest in terms of market capitalisation. And if the pricing gains of the past month continue, it won't be too long before it claims the top seat.
The price of Ethererum has skyrocketed in recent weeks. Since 6 April, the cryptocurrency is up 66.88% to US$3,443 a coin today (at the time of writing). By comparison, Bitcoin has lost 0.9% over the same period and is currently trading at US$57,000 a coin.
Over the past 12 months, Bitcoin is up 528%, while Ethereum is up 1,672%.
If you're not too familiar with Ethereum, it is a cryptocurrency that functions a little differently from Bitcoin, even though the two coins use similar blockchain technology. Whilst Bitcoin was established with a fixed number of coins available for mining, Ethereum has no such limit. Ether tokens can also be used to create contracts between different holders. It's that which is what has a lot of people excited about its future.
But why now? Why is Ethereum rising so rapidly?
Image source: Getty Images
Ethereum pips Bitcoin
Well, Simon Peters from eToro reckons Ethereum is continuing to "price its case". He points to a recent announcement from the European Investment Bank. The Bank has recently announced the issuance of its first 'digital' bonds using blockchain technology. These bonds will be issued using the Ethereum network. He also notes that "the number of DApps (Decentralised Applications) continues to grow on the platform, and there is now growing demand from institutional investors for the Ethereum crypto asset itself".
Peters also points out that S&P Dow Jones Indices has, for the first time, announced it has launched 3 new 'crypto asset indexes'. These will track Bitcoin, Ethereum and a combination of both. If these indexes lead to a new range of exchange-traded funds (ETFs) that allow retail investors to invest in cryptocurrencies through them, we might see even more buying pressure in the assets themselves. And it's not like there's any shortage of that.
Aussie investors certainly can't get enough of the crypto arena, as my Fool colleague pointed out yesterday. This sure has been an interesting space to watch, and it looks though that isn't going to change.
