29 January 2021

ethereum

Ether Hits All Time High, As Harvard, Yale, And Others Buy Crypto

After a series of brutal sell-offs last week that led to Bitcoin dropping below $30,000, prices managed to rebound 8% over the past few days. The real winner of this week’s crypto battle is none other than the world’s second largest cryptocurrency: Ether.

Ethereum managed to climb to a new all-time high rising to a market value of $1,476. This translates to a 90% gain in value from its prices last year . Moreover, the coin has managed to double in value in January of 2021 alone. Though financial interest in Ether tends to follow Bitcoin rallies, there are other factors contributing to Ether’s current price surge: 

Ethereum’s network underwent a range of logistical improvements with what could be one of the largest upgrades to their network to-date, drastically improving their scalability 

The launch of ethereum 2.0 with greatly reduced transaction fees, creating more desirable conditions for traders and investors. 

The elimination of ‘wasteful mining,’ dropping the need for consumption of vast amounts of energy (a reputation that tends to plague crypto). Now, transactions on the ethereum blockchain will be validated through a proof-of-stake (PoS) system. 

The potential price surge also stems from some upcoming plans for the launch of Ether futures trading. The world’s largest marketplace for derivatives contracts, CME Group, will launch Ether futures contracts in the coming weeks. Derivatives contracts allow for stock commodities and different assets (in this case, Crypto) to have a pre-agreed-upon price for delivery at a future date. This provides adequate risk mitigation to those who find the world of cryptocurrency to be too volatile. This is seen as a hallmark for any financial asset. 

How does this translate in our day-to-day dealings? Suppose a retailer wants to begin acceptings payments in Ether, but still needs to report taxes and revenues in US dollars. Derivatives allow retailers (and others) to hedge against loss from possible slips in the market. CME is a major player in adding legitimacy for Ether, all translating into the price surge and vote of confidence that we are seeing today. CME Group’s Ether Futures will be taking place next week on February 8th. 

Also, CME Group currently holds 10,500 Bitcoin contracts, each of which hold five Bitcoin. That corresponds into a market impact of 52,500 Bitcoin, or a current value of $1,559,250. 

Other ways this could impact Ether would be if the price of ETH speculation should diverge from its spot price, resulting in short-term investors selling off and institutional investors buying in at the spot market price. This could potentially drive up Ether prices even further. 

As Bitcoin’s returns begin slowing down, and the coin witnesses even more price pullbacks, it is expected that investors will want to diversify their investments with the market’s smaller coins. With the continued growth in DeFi, CME Group’s Ether Futures could also expedite institutional investors’ moves to Ethereum, thus offering an opportunity for retail investors today to buy-in on ETH on today’s market prices before the Ether Futures is listed on February 8th. 

Additionally, having served up 4.5x returns in the year 2020 alone, the future is not looking too shabby for Ether. With a price projection of $2,500 by the end of 2021, the factors lined up for the markets second biggest coin appear promising. 

Institutional Educational Investors Jump On Crypto

Sources indicate that some of the largest university endowments, including that of Harvard, Yale, Brown, and U of M, have reportedly been purchasing crypto for the past year. This is yet another vote of institutional confidence for the crypto world from historically conservative investors. 

Some of these endowment funds have reportedly held accounts for over a year. As such, they are presumed to be sitting on impressive returns to their investment. 

The size of Harvard’s endowment alone is over $40 billion in assets, with Yale following at $30 billion. These endowments are typically allocated into various assets for investments for the universities. It appears as though they have now dipped into the cryptocurrency market as sources revealed they have CoinBase accounts. 

The state of heightened institutional demand has previously reached big name financial institutions and banks. These includes the likes of Goldman Sachs and JMorgan developing a custom blockchain service, global banking giants HSBC shifting $20 billion worth of assets in Bitcoin, and investment giant Fidelity offering a ‘Bitcoin-only’ investment fund, to name a few. 

This all took place amid many voices denouncing crypto last week when Bitcoin’s price took a nose dive from its $40,000 high. While some skeptics continue to describe Bitcoin’s market as a bubble, the crypto world appears to be going strong. With more developers than ever on their network, an end of year price projection of $2,500, and a ton of institutional interest right around the corner, the near future appears to be bright for Ether. 

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