The crypto world has seen a massive slump over the past week, with Bitcoin losing its value massively after Tesla CEO Elon Musk's confusing remarks about it and China's tighter regulation of digital assets. Having remained in the shadow of the world's largest cryptocurrency, Ethereum has now attracted the attention of investors. Though it, too, has lost a significant value, experts say the current downward spiral is a course correction for these assets that have been on a roller-coaster ride since the beginning of this year.
While Bitocin crashed, Ethereum rose astonishingly. The crash led to many people questioning the unchallenged supremacy of Bitcoin, asking whether this could be the time for Ethereum to rise. Just a week ago, Ethereum had reached its all-time high of $4,382, rising more than 450 per cent since the start of 2021. It has since lost a significant value, possibly facing a ripple-effect of the digital market crash. At the time of writing this report, it was trading at $2,626, according to CoinDesk.
Experts say the price drop is mainly a result of profit-booking by short-term investors and this correction could be a good opportunity for buying digital assets. If investors' faith is restored, the digital currency could see another bull run. Still, the market has remained volatile and investors should be cautious in approach.
What is Ethereum?
Ethereum, or ether for short, has the second-largest market capitalization after Bitcoin. It was founded in 2013 by Russian-Canadian programmer Vitalik Buterin and other crypto entrepreneurs. Many of those who started Ethereum were previously associated with Bitcoin.
How is it different from Bitcoin?
Unlike Bitcoin, Ethereum is based on an open-source platform, meaning people can build apps on top of it. Bitcoin is a payments network that can be used to transfer value between two people and it's mainly used for investing. On the other hand, Ethereum is aiming to build an infrastructure that isn't maintained by any single authority.
Developers are giving Ethereum a system-wide upgrade. Named after the brightest star in the northern constellation of Aquila, the “Altair” upgrade is likely to be released either in July or August. The upgrade is also expected to make the crypto more energy-efficient, a major concern for environmentalists who have criticised the increasing fossil fuel use in trading Bitcoin.
Even Elon Musk recently reversed Tesla's decision to accept payments in Bitcoin, citing high energy consumption, which ultimately also contributed to its crash.