Ethereum has somehow managed to record gains even as other cryptocurrencies continue to struggle.
Ethereum prices have been bullish particularly over the past week after bottoming out at $905. Data shows that the gradual rise in the coin’s price has been accompanied by an upsurge in trading volumes as well. It hit a 12-day high of $1,257 on January 28 and this rebound has left a bullish trend on its price chart.
Possible Reasons behind the Rally
However, it is important to note that prices from South Korean exchanges have once again been incorporated into the data after having been abruptly removed and negatively impacting global prices.
The reason that had been given for their removal was their “extreme divergence in prices from the rest of the world and limited arbitrage opportunity.” This divergence might be a contributing factor to the Ethereum price boost.
However, the premium that the Korean market has over the rest of the world has decreased significantly since the start of 2018. This makes the prices seem a lot more legitimate and the approximate divergence is approximated to be $70 between this and other markets in the Western world.
One of the main reasons that might be spurring the growth in trading volume as well as token price is its increased adoption by ICO projects. The Ethereum framework allows for the development of decentralized apps.
These developers have to pay gas prices in the form of ETH tokens in order to use their applications’ native tokens on the platform. Gas demands are therefore likely to maintain the upward trend for as long as there are ICOs based on the Ethereum network.
A recent development that could also have aided the gradual price rally could be the Weiss ratings that last week placed Ethereum ahead of Bitcoin. Ethereum got a B for its high speeds and “better technology” while Bitcoin managed a C+.
As at press time, however, the coin has recorded a slight drop from its previous high to reach $1,172. Similar drops have also been recorded on a number of other prominent crypto coins.
Japanese Crackdown
The overall cryptocurrency price stumble has been linked to a Japanese crackdown following the report of a $380 million heist from local exchange Coincheck. The Japanese financial regulator has vowed to inspect crypto exchange platforms in a bid to prevent future heists.
The Coincheck theft was executed by hackers who made away with NEM tokens that were reportedly stored on hot wallets. These are a lot easier to hack than cold wallets as they are online and can thus be accessed over the internet.
The site has said that it will use its own reserves to restore the lost funds to the rightful owners as it looks into the issue. The stolen NEM tokens belong to about 260,000 customers of this Tokyo-based exchange site. The site is yet to set a timeframe for the promised restoration of funds.
However, the Ethereum platform is processing transactions worth more than $1.2 million on a daily basis but it remains to be seen whether it will maintain the past week’s bullish trend.
