April was a hype-filled month for cryptocurrencies as the virtual coins market experienced a flash crash in mid-April, plunging deep into the red before rebounding strongly a week later as if nothing had happened.
Yes, it is true that the cryptocurrency market has been volatile from the very beginning, but the weeks have been a particularly wild ride for millions of investors around the world. Probably, volatility is what have helped cryptocurrencies reach the mainstream market, they appear to be particularly bolstered by growing institutional interest and pandemic-induced financial uncertainty.
The point is not volatility though. The market moved up and down a lot over the past 4 weeks but they were all together in this.
Almost all cryptos generally moved in lockstep. Now the market looks split and divided into those which rise and those which fall.
So what is happened?
Ethereum, or ether for short (ETH) hit a new all-time high of about US $3,500 on Tuesday, after breaking the $3,000-mark for the first time on Monday. The second largest cryptocurrency has quadrupled in value this year, and its market cap now exceeds the total combined market capitalization of the ‘Big Four’ – Australia’s four largest banks – National Australia Bank Ltd (ASX:NAB), Westpac Banking Corp (ASX: WBC), National Australia Bank Ltd (ASX:NAB) and ANZ Banking Group (ASX:ANZ).
The decentralised, open-source blockchain cyrptocurrency is the second-largest cryptocurrency by market capitalisation, after bitcoin.
Besides institutional interest as reported last week in relation to the European Investment Bank (EIB), growing buzz around NFTs – non-fungible token has also helped pushed up Ethereum – which uses uses “smart contracts” to extend transactions with certain conditions. NFTs often offer fans of an artist, celebrity or athlete unique video and other digital content.
Although often seen as the “little brother” of the more famous bitcoin, Ethereum is the cryptocurrency of first choice for the purchases of many NFTs.
What’s more, eBay CEO said on Monday the e-commerce giant was looking into accepting cryptocurrencies and considering how to facilitate the buying and selling of NFTs on its platform.
This chain of events appears to be what has divided the market.
Whilst Bitcoin may well be the market leader in valuation terms and has also seen remarkable recovery this week, it started drifting down as ether was breaking new records. With ether and other altcoins rising, the market share of bitcoin has plunged from about 72% at the start of the year to 45%.
At the same time, Cardano (ADA) which is seen as a likely challenger to Ethereum in terms of functionality, also appears to be unhappy. Just like Ethereum, Cardano is a blockchain project that specializes in smart contracts. It is usually said that there’s room for more than one winner among digital tokens as the sector evolves, but the investors apparently worry.
At the time of publication, the variable-priced digital currencies in the Big 10 are changing virtual hands as below:
Bitcoin (BTC) at US $56,400, Ether (ETH) at US $3,400, ripple (XRP) at US $1.48, Binance Coin (BNB) US $655, Dogecoin (DOGE) at US $0.48, cardano (ADA) at US $1.32, ChainLink (Link) at US $42, Stellar (XLM) at $0.53, Litecoin (LTC) at US $320 and Vechain (VET) at US $0.2.