Ethereum, the second-largest cryptocurrency after bitcoin, is soaring as traders pile into the cryptocurrency ahead of a closely-watched upgrade code-named London.
The ethereum price is up 8% on the last 24 hours, with its rally helping the bitcoin price to tick slightly higher and sending ethereum’s biggest rivals—Binance’s BNB, cardano, polkadot and solana—up between 3% and 10%.
The combined cryptocurrency market, currently dominated by bitcoin and ethereum, has added almost $500 billion since its July lows.
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Ethereum’s London upgrade, designed to improve network efficiency and fee predictability, is scheduled to go live around 8am EDT and is part of ethereum’s long-awaited move away from the energy-intensive proof-of-work model used by bitcoin to proof-of-stake—allowing users to generate new ether tokens via their exising holdings.
The London upgrade will also see some of ethereum’s ether tokens destroyed, or “burned”—a change that some think will mean ethereum is able to further close the gap on bitcoin’s $700 billion market capitalization as its tokens become more scarce. Ethereum currently boasts a market capitalization of around $300 billion. Earlier this year, ethereum cofounder Vitalik Buterin said the upgrade could mean ethereum becomes more “sound” than bitcoin.
Ethereum’s price, up a massive 500% on this time last year, has outpaced bitcoin and most other major cryptocurrencies in recent months as the market for decentralized finance (DeFi) and non-fungible tokens (NFTs) explodes.
DeFi, the idea that the likes of lending and insurance can be replicated by software protocols cutting out banks, and NFTs, unique digital crypto tokens tied to media, have both become multi-billion dollar markets over the last couple of years. Almost all DeFi funds and NFTs are currently based and traded on ethereum’s blockchain.
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However, some of ethereum’s rivals, including Binance’s BNB, cardano, polkadot and solana which proponents claim are already more technologically advanced than ethereum, are hoping to win DeFi and NFT market share.
“Just like in 2017, ethereum has proven itself to once again be at the epicenter of crypto market activity,” Pete Humiston, manager at U.S. bitcoin and crypto exchange Kraken’s Intelligence division, said in a report out this week.
“Both DeFi and the NFT space, two robust industry subsectors worth tens of billions of dollars in their own right, take place almost exclusively in ethereum’s ecosystem today. This may explain why demand has been so resilient. Ether has been an outperformer all this year, and we see no reason why that will change in the near-term.”