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Ether Breaks $3,000 Barrier, Outshines Bitcoin in 2024

Ether (ETH) has reached a new milestone on Tuesday, surpassing $3,000 for the first time since April 2022. The second-largest cryptocurrency by market capitalization has been on a tear lately, gaining more than 12% in the past week and nearly 30% since the start of the year, according to data from CoinGecko.

Ether’s impressive performance has eclipsed that of bitcoin (BTC), the leading cryptocurrency, which has also seen a strong rally in 2024. Bitcoin’s price rose more than 2% in the past 24 hours and was trading close to $53,000 at the time of writing. However, bitcoin’s year-to-date return was only 22%, lagging behind ether’s.

Source: Coingecko

One of the main drivers behind ether’s surge is the growing anticipation that the U.S. Securities and Exchange Commission (SEC) could soon approve the first spot-based ether exchange-traded fund (ETF). Unlike the bitcoin ETFs that launched last month, which track bitcoin futures contracts, a spot-based ETF would directly hold the underlying asset, in this case, ether.

A spot-based ETF would offer more exposure and liquidity to the ether market, as well as lower fees and risks for investors. It would also signal the SEC’s recognition of ether as a legitimate and valuable asset, boosting its reputation and adoption among more conservative and institutional investors.

Several firms have already filed applications for an ether ETF, including VanEck, WisdomTree, and Kryptoin. However, the SEC has not yet made a decision on any of them, and it could still delay or reject the proposals. The SEC’s chairman, Gary Gensler, has expressed some openness to approving a spot-based ETF, but he has also raised concerns about the lack of regulation and oversight in the crypto industry.

Meanwhile, ether’s fundamentals remain strong, as the Ethereum network continues to evolve and innovate. The network is undergoing a major upgrade, known as Ethereum 2.0, which aims to improve its scalability, security, and efficiency. The upgrade will also transition the network from a proof-of-work (PoW) consensus mechanism, which relies on energy-intensive mining, to a proof-of-stake (PoS) mechanism, which rewards validators for staking their ether.

The PoS transition is expected to reduce the network’s carbon footprint, as well as increase the demand and scarcity of ether, as more ether will be locked up in staking contracts. According to the Ethereum Foundation, more than 8.6 million ether, worth over $25 billion, have already been staked on the Ethereum 2.0 deposit contract, representing about 7.4% of the total supply.

Ether’s price could also benefit from the growing popularity and innovation of decentralized applications (DApps) and decentralized finance (DeFi) platforms, which run on the Ethereum network. DApps and DeFi offer various services and products, such as lending, borrowing, trading, gaming, and social media, without intermediaries or centralized control. According to DappRadar, there are over 3,000 DApps on Ethereum, with over 1.6 million active users and over $20 billion in total value locked.

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