The cryptocurrency Ethereum has just reached another new all-time high. And we might be able to thank Elon Musk and Dogecoin
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The price of the cryptocurrency Ethereum (CRYPTO: ETH) continues to claim headlines. The ‘little sibling’ of Bitcoin (CRYPTO: BTC), Ethereum seems to have picked up the slack from a stagnating Bitcoin price.
While Bitcoin has gone nowhere between February and today (with the usual volatility in between of course), Ethereum has rocketed more than 82% over the same period. In fact, just last night, Ethereum made a new record all-time high of US$4,175 per coin.
But, as is the way of cryptocurrencies, it was not to last. In just the few hours since its new high, the Ethereum price has slid more than 6%, and is going for US$3,894 at the time of writing.
Ethereum rises, then slips
So what’s going on here? The movements of cryptos like Ethereum and Bitcoin can seem like madness and chaos. And we haven’t even mentioned Dogecoin (CRYPTO: DOGE) yet. But perhaps there is at least some method in this madness.
According to eToro’s cryptocurrency analyst Simon Peters, it’s demand from large institutional investors that drove Ethereum’s recent rise:
Demand from institutional investors is fuelling this latest move higher as large-scale buyers diversify their exposure in this emerging asset class, with Ethereum the natural next pick.”
He also cited Ethereum’s lower cost compared to Bitcoin as working in the cryptocurrency’s favour:
This lower dollar value makes Ethereum attractive to investors who want to own whole coins, with the pool of potential investors who could invest $4,000 to buy one ethereum clearly larger than the number of investors who are willing to spend $59,000 to own one Bitcoin.
Peters also points to a recent hard fork of Ethereum, as well as growing numbers of decentralised apps (DApps) as supplementary growth vectors.
Another factor that may be working in Ethereum’s favour is the recent, but dramatic, fall from grace of Dogecoin. The notorious ‘meme coin’, Dogecoin quickly went from a joke over the past few months to be one of the hottest cryptos on the market. That’s what tends to happen when something goes from 7 cents a coin to 70 cents in the space of a month.
But Doge topped out around 72 cents just a few days ago. Since then, Doge has cratered to around 47 cents today, according to CoinDesk.
My Fool colleague Brendon Lau explained why this happened here, but basically, it involves Tesla Inc‘s (NASDAQ: TSLA) Elon Musk and Saturday Night Live (no, I’m not joking). Whilst Doge fell, Ethereum rose to its new highs, so it’s not a stretch to draw a connection there.
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Sebastian Bowen owns shares of Bitcoin and Ethereum. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Bitcoin. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.
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