Ethereum Overtakes XRP Following Impressive Rally

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Fredrik Vold

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Fredrik Vold

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June 26, 2023

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Although the second half of December and beginning of January has been a good period for most cryptocurrencies, Ethereum stands out as one of the biggest winners during the period.

Having gained close to 90% since its bottom in mid-December, the price of ether is currently trading north of USD 150, up from USD 80 just two weeks ago. Following the price rally, the long-time number two cryptocurrency by market capitalization also managed to regain its spot on the crypto market capitalization ranking after being overtaken by Ripple’s XRP in November.

Top 3 coins by market capitalization:

Ethereum is now once again well-positioned as the second-most valuable cryptocurrency, with a market cap roughly a billion dollars over that of XRP.

Ether price chart:

What’s driving the rally?

Many crypto investors are now wondering what may have propelled ether back up to these highs. So far, most observers and analysts point to three reasons: a price that was already extremely depressed and oversold, Ethereum co-founder Joseph Lubin calling the crypto bottom, and the upcoming Ethereum fork known as Constantinople.

Starting with the price, we have observed that ether has been among the cryptocurrencies that have dropped the most in 2018. In general, assets that have fallen sharply also tend to bounce sharply once good news comes out and the sentiment starts to change.

Indicators used by traders and technical analysts also support this, with for example the Relative Strength Index (RSI) being in “oversold” territory in mid-December with a reading of 26. A reading below 30 on the RSI is generally seen as a good buying opportunity for traders who follow this indicator.

Second, Ethereum’s high profile co-founder Joseph Lubin posted this message on Twitter just a few days after the most recent bottom in the ETH price:

According to Lubin, we have now seen the “epic amount of fear, uncertainty, and doubt” that many have been waiting for in order to call the bottom of the bear market. However, several insiders and crypto whales have called the bottom before, just to be proven wrong a few weeks later. It is therefore unlikely that this alone has been the driving force behind the rally.

Lastly, the Constantinople fork is expected to occur around January 16, and once implemented this will reduce the block rewards for Ethereum miners from 3 to 2 ethers, thus decreasing the supply of new ETH tokens that are coming into circulation. As is often the case in economics, lower supply leads to higher prices when other factors remain constant.