A representation of cryptocurrency Ethereum is placed on a PC motherboard in this illustration taken June 16, 2023.
Dado Ruvic | Reuters
The price of ether jumped on Wednesday as investors moved into the cryptocurrency ahead of key upside catalysts expected in January.
Ether was last higher by 6%, according to Coin Metrics. Solana’s SOL token, among the top performers in crypto this year, was up 2%.
Ether has trailed SOL throughout 2023. This month, it’s up about 15% compared to the SOL token’s 82% gain. On the year, ether has advanced 95%, while SOL has soared more than 980%.
Solana is a Layer 2 protocol, meaning it was designed to be overlaid on Layer 1 blockchains like Ethereum or Bitcoin to address challenges in scaling transactions.
Ether’s rise on Wednesday “signals that the market is finally rotating into an ETH-centric trade, though it probably will not fully manifest until after the U.S. spot Bitcoin ETF receives appropriate regulatory approvals,” said Matt Maximo, a senior research analyst at Grayscale Investments. “Ethereum’s on-chain activity remains extremely strong, so I believe it is less of ‘if’ rather than ‘when’ ETH will catch up.”
Investors are watching two key events in January. The first is Ethereum’s big “Dencun” upgrade, expected around Jan. 17. It’s meant to reduce the costs associated with Ethereum’s Layer 2 solutions, Maximo told CNBC.
Investors have also been closely monitoring developments in the potential approval by the Securities and Exchange Commission of a spot bitcoin ETF. The decision is widely expected to come in January.
Some investors are trading on optimism that if a spot bitcoin ETF gets the green light, that could bode well for the potential of a spot ether ETF, Needham analyst John Todaro told CNBC.
