Breaking new all-time highs, the recent price action of Ether ( ETH ) has taken the cryptocurrency market by storm and signaled the official start of the alternative season. Several analysts predict that Ether will surpass its previous all-time high of $2130 and continue to outperform Bitcoin for the foreseeable future.
Price predictions aside, Ethereum is undeniably at the forefront of cryptocurrencies, being home to flagship decentralized finance and token projects. However, this movement comes at a time when the network is at a major crossroads.
While many first tier projects have been labeled as "Ethereum killers" over the years, Ethereum is only now facing real competition, which is mainly due to scalability and overload issues. If no solution can effectively scale the network, Ethereum may soon begin to lose ground to competing smart contract platforms.
Still, Ether is the undisputed king of altcoins, second only to Bitcoin ( BTC ) in terms of market capitalization. So what factors are driving ETH prices higher, and is the competitive landscape shaping up to pose a real threat to Ethereum's dominance?
There is substance behind the hype, as NFT sales and auctions are growing in volume and use cases, especially in the gaming industry and art world. However, digital artists are not the only ones benefiting from the trend and exploring the technology.
From celebrities like Logan Paul and Snoop Dogg to major sports powers like Formula 1 and the NBA - and now even movie studios like Warner Bros. - all sorts of people and companies are using NFT as a way to promote themselves and create alternative revenue streams.
When asked how NFTs are impacting the Ethereum ecosystem and the price of Ether, Suz Lee, Director of Marketing at Blind Boxes - NFT's digital graphics platform - told Cointelegraph: "As broader adoption takes place across major consumer sectors, NFT has catalyzed Ethereum's market dynamics since December and will continue to influence its price based on strong interest in its real-world applications and the degree to which it can be scaled. "
NFTs are not only unique - they offer content creators verifiable ownership of their work and a fairer share of the profits by eliminating middlemen. However, despite their strong potential to disrupt various industries, NFTs are probably not the main driving force behind the recent Ether movement. Without the knowledge of many in the cryptocurrency community, the prices of NFT collectibles have actually quietly collapsed .
While the NFT craze seems to be slowing down, DeFi on the contrary is once again breaking records. Due to the surge in Ether prices, the total value locked up in DeFi protocols is now over $61 billion. Significant gains can also be seen in the number of transactions and valuation of DeFi tokens.
Just as Bitcoin serves as a gateway for institutional investors to enter the cryptocurrency market, Ether thus gives investors the opportunity to experiment with DeFi. Many companies and venture capital groups, such as the DeFi Alliance (formally the Chicago DeFi Alliance), have already made bold investments in the DeFi industry.
The number of institutional investors coming into DeFi is expected to increase, which will help provide liquidity, reduce volatility and increase the credibility of the industry. Many DeFi projects are already developing solutions for institutional investors , offering risk management tools and other institutional-level services - similar to traditional finance - to enable these firms to hedge their positions and minimize risk.
