The value of Ether has increased significantly over the last few weeks to hit the $700 mark this week. This year alone, Ether's price has risen by 5,000%. Just like Bitcoin, the price of this cryptocurrency is highly volatile, recording frequent fluctuations. Over the past 30 days, Ether's volatility index stood at 5.26%.
Despite this price volatility, the number of transactions taking place on the Ethereum blockchain is the highest of all the cryptocurrency platforms which are currently active.
"The number of Ethereum transactions per day is averaging twice that of Bitcoin per day, implying greater liquidity," notes Sheldon Corey, CEO of Arges Inc/Worlds Financial Center.
The high number of Ethereum transactions is a result of its growing adoption. Experts believe that the smart contract functionality embedded in Ethereum's blockchain could be driving its demand, especially from companies seeking to launch initial coin offerings (ICOs).
"Personally, I think that ETH has a much better growth prospect going forward largely due to Ethereum's smart contract that is being used predominantly by almost all ICOs, although LTC in the same last one month has shown over 300% growth," says Jameel A. Shariff, CEO of P2PS.
Further adoption
Ethereum is now enjoying adoption by mainstream financial institutions. Barclays Bank, UBS and Credit Suisse are among top financial institutions that are tapping into the Ethereum blockchain platform.
"On Monday, Swiss banking giant UBS announced it is planning to adopt Ethereum smart contracts as a means of complying with new EU regulations scheduled to begin Jan. 3, 2018," Corey adds.
This is likely to raise public confidence in Ethereum and further increase its adoption, not only by early stage companies, but by other mainstream institutions in the financial and technology sectors as well. The effect of this demand will become evident in Ether's price in the years to come.
"Walletinvestor.com predicts Ethereum will rise to $1190 by this time next year, and to $3095 in 5 years, not too bad considering it has only been around since July of 2015. So, in a volatile and speculative cryptocurrency market, Ethereum may well be the safest bet, because of its greater liquidity, utility and institutional adoption," Corey says.
Future prospects
Compared to Bitcoin, the Ethereum platform is increasingly being used to develop blockchains in both the technology and finance sectors. This is largely due to Ethereum's ability to secure smart contracts and carry data.
Commenting on how these two cryptocurrencies compare, Shariff says, "Bitcoin seems to have reached its peak and since has dropped lower. It also seems like it is unable to hold the high levels or even sustain the high levels. It is seen as trading with a negative bias. Is it because it has run out of steam or have the speculators cashed out? Are these good levels for fundamental long term investors to start looking at taking a positional call on Bitcoin? Or is it better to acquire Ethereum that has more than doubled in a month?"
There is no doubt that the growing adoption and increasing speculation around Ether will continue to push its price upward in the coming years.
Disclaimer: David Drake is on the advisory board for most of the firms mentioned or quoted in this article.
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