While many are new to cryptocurrency world and have been asking the question: “Why Ethereum Price is growing at a faster rate than BTC”. After extensively studying the market and observed the point at which the first spike of Ethereum occur in March and then again in May after the start of Monaco and other ICOs, I believed that ICOs is the major demand driver for ETH.
Initial Coin Offer (ICOs): This is a way for cryptocurrency startup companies to raise fund for their project instead of the traditional public offerings. Most of these ICOs allow investors to exchange Ethereum (ETH) for their tokens. Though, some also accept BTC and some other Altcoin but majority of the projects are on Ethereum platform and ICOs accepting ETH is far greater than BTC, therefore generating higher demand for ETH.
Other factors Includes
- ETH Features: ETH offers several features than BTC which is just a digital currency. Ethereum is a decentralized platform that runs smart contracts and allows other people to build Decentralized application(Dapps) on its blockchain. So, these bring added value to ETH and investors are putting their money in because it offers them higher returns in a short while.
- Markets: ETH has 285 markets (i.e. pairs) and list on 64 exchanges as of today (June 15th, 2017, see reference 3).
To further support my view about ETH price rise, lets see Morgan Stanley point of view why Bitcoin (BTC) price is spiking high too. Morgan Stanley, a leading global financial services firm providing investment banking, securities, wealth management and investment management services believed that the sudden rise of Bitcoin is associated with three major reasons:
- ICO's, or Initial Coin Offerings
- Cryptocurrency as an alternative way to circumvent China strict limits on currency transfer out of the country.
- Korea and Japan Japanese government legalizing Bitcoin as means of transaction. But noted that "In Korea, however, there is not a clear explanation for the surge,".
References:
- http://www.businessinsider.com/bitcoin-price-confounds-morgan-stanley-analysts-2017-6
- https://www.ethereum.org/
- https://coinmarketcap.com/currencies/ethereum/#markets
