Facts, Opinions, and Speculation on the Ether Run to $1.4k USD

Ether (ETH) hit an all time high on January 9th due to a series of events explained below. Unfortunately, most of the rest of the market suffered a correction.

Essentially what happened is complex, but speculation on what likely occurred can be summarized as: after an epic alt run over the past few weeks (including a run-up of Ethereum-based tokens from ICOs), and in light of an important update-in-the-works for Ethereum called Casper, investors began moving to Ether. The result was that Bitcoin and alts dropped as money flowed out of of Bitcoin and alts and into Ether.

FACT: Ether ran from about $750 to $1.4k since the Casper announcement. More importantly to some investors however, it moved from .05 BTC to almost .1 BTC! Thus, it not only gained fiat value, but it gained a ton of value against the Bitcoin. That means the run was more epic than it might appear on the surface. This was the second run Ether has had since December that resulted in it doubling its value compared to BTC. Ether’s all time high in BTC value is .15 (so by that metric there is room to run… however its low in-between was nearly .02, so by that metric, there is room to go the other way as well).

More specifically, one can speculate that the following factors were likely at play:

  • Ether began picking up steam in late December as it was announced the long awaited Casper was in testing stages. Without getting into details, Casper is poised to fix a longstanding issue with Ether the cryptocurrency and thus indirectly the Ethereum network.
  • New investors wanting to invest in alts (for example Ripple’s XRP) had been unable to sign up for crypto-to-crypto exchanges like Kraken, Binance, and Bittrex due to a spike in demand the sites were not prepared to handle. Thus, new investors were presented with a limited set of choices for what to do in the meantime. Those investors likely bought ETH via platforms like Coinbase/GDAX in anticipation of trading ETH to alts, thus causing a spike in demand.
  • To further explain the above logic of new investors going to Ether first, consider, Bitcoin has struggled to increase in value while Ether made steady ground from late December until now. Those looking for a major coin to wait likely considered a range of factors including the fact that Ether is less expensive, has a better 30 day chart, and has lower fees for transactions.
  • There are many new Ethereum-based ICOs coming out. With the last round of ICOs doing so well, it is likely people are holding ether to ensure they can participate in the next round. Many ICOs require Ether to participate.
  • Many who had invested in Ethereum-based ICOs and those who ran ICOs in the summer and fall saw their ICO tokens increase in value by as much as 1,000% – 2,000%. It is very likely those who ran ICOs and ICO investors took gains to Ether (thereby increasing their total Ether holdings beyond what they would have had when they participated in the ICO). Meanwhile, it is likely they held Ether (thus diminishing the tradable supply).
  • The epic gains in alts were generally akin (KIN pun intended) to the ICO gains over the past few weeks. When Ether started moving and Bitcoin and alts faltered, its like people took gains to Ether (thereby spurring on a vicious cycle for Bitcoin and Alts).

Put all those factors together and you get a ton of forces working in Ether’s favor. With that said, it is likely that Ether will need to consolidate and correct before it makes its next run (just a matter of logic; not a statement on Ether’s viability in the market). Further, with alts and BTC now effectively on sale, it increases the likelihood of new and old investors alike taking their Ether gains and buying some now relatively undervalued coins. This logical cycle is part of what causes what we can call “the rotation.”

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"Ether Hits an All Time High; Rest of the Market Dips" contains information about the following Cryptocurrencies:

Bitcoin (BTC), Ethereum / Ether (ETH), Ripple (XRP)

What do you think?