Why is Ethereum Soaring and Pulling Bitcoin With It?

Ethereum, which has regained its spot as the world’s second largest cryptocurrency by market capitalization after recent gains, is soaring today, helping to boost the cryptocurrency market—including bitcoin and ripple (XRP) as a post-Christmas rally rolls on.

Ethereum has climbed some 80% over the past month, adding a further 12% rise over the last 24 hours, as an upcoming so-called hard fork pushes up demand for ethereum’s tradable token ether.

Bitcoin has added some 4% over the last 24 hours, while ripple, a common name for the XRP tradable token, has climbed 3%. Ripple last year overtook ethereum as the world’s second largest cryptocurrency on the back of surging interest from the established financial services sector but has failed to hold on to those gains.

The hard fork, in which a cryptocurrency splits in two, will see ethereum miner rewards fall from three ether to two and decrease the block time, making the network faster. The update is set for January 16 and is thought to be a key component of ethereum’s transition from using a proof of work protocol to proof of stake.

Cryptocurrency forks do not always mean their value rises, however.

Bitcoin forks have previously led to minor drops in the bitcoin price in the short term. When bitcoin cash forked from the bitcoin network in July 2017, bitcoin dropped some 4%—though bitcoin had risen strongly in the months leading up to the fork and continued to do so in following months before peaking in December 2017.

Bitcoin cash itself then rallied hard ahead of its split in November last year. The bull run proved to be…

Continue reading at FORBES.com

 

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