SA crypto exchanges ride on Ethereum’s all-time highs

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South African cryptocurrency exchanges are seeing explosive growth in Ethereum businesses.

After the price of Ethereum, the world’s second most popular cryptocurrency, this week topped the $ 4,000 mark for the first time.

Last week, Nigel Green, CEO and founder of deVere Group, made an optimistic forecast that Ethereum price is expected to hit $ 5,000 if the cryptocurrency hits new all-time highs.

According to Finder’s latest Crypto-Currency Predictions Report, Ethereum will hit $ 4,512 this year and $ 19,842 in 2025.

The price of Ethereum will be supported by increased transaction usage, the increase in decentralized financing (DeFi) and non-fungible tokens as well as higher acceptance rates by institutional investors.

Around 51% of the Finder panel say Ethereum, rather than Bitcoin, will be the most widely used digital currency by the end of 2022.

University College Dublin Lecturer and Assistant Professor Dr. Paul Ennis, expects Ethereum to be worth $ 10,000 by the end of the year. The currency is severely undervalued and has far more use cases than Bitcoin.

At the time of writing, Ethereum was trading at $ 4,320 (R 60,400).

In SA, Richard de Sousa, CEO of Crypto Exchange AltCoinTrader said, “We are seeing explosive growth in volumes and interest in Ethereum on our exchange and this seems to be gaining momentum right now.

“It’s something we’ve seen in the past, but there’s really been a change in the way people look at Ethereum.”

Likewise, Marius Reitz, Luno’s GM for Africa, says the price on the Luno platform rose by over 80% in April. Although the volume of bitcoin traded in SA fell 2% from March to April, that of ether rose 35% from the previous month, he notes.

“Luno saw new Ethereum wallets grow 44% last month in South Africa and the volume is up 35%. Worldwide, the new Ethereum wallets on Luno have increased by 62%, the global volume by 43%, ”explains Reitz.

Farzam Ehsani, co-founder and CEO of VALR, agrees, saying that the local crypto exchange has seen a phenomenal surge in interest and trading in Ethereum over the past year.

“In one year, the price of ether has increased by over 1,400% and the VALR volume has increased 100-fold,” says Ehsani.

According to De Sousa, the many applications and the number of developers working on the platform add to the value of Ethereum.

“Ethereum is not just a simple store of value like Bitcoin, but also a useful currency. There are so many things you can do with Ethereum – you borrow, you borrow. It replaces a lot of traditional financial products, ”he says.

“We have seen in the past few years that the Ethereum blockchain is worth billions of dollars because you can use Ethereum to make different tokens. So it is not just the value of Ethereum, but also the value of all the underlying tokens built on the Ethereum platform, and this currency will increase dramatically in the short to medium range, although there are scaling issues. Term.”

De Sousa points out that there are many competitors to the Ethereum blockchain, but none of them have fully functional products to date.

“There are promising results in this area and we won’t see until they have fully functional products. I’m talking about coins like Polkadot and Cardano, which are very interesting projects but haven’t fully started yet. “

According to De Sousa, traders see Ethereum not only as an investment, but also as a mechanism to generate passive and recurring income.

For Reitz, the ether market capitalization in relation to the Bitcoin market capitalization is now at its highest level since 2018, with the ETH market capitalization currently at 44.6% of the size of the Bitcoin market capitalization.

He explains that, similar to Bitcoin, Ethereum is used for investing and speculating. Institutional interest in Ethereum has followed a surge in interest in Bitcoin this year, Reitz says.

“The main differentiator is that Ethereum supports DeFi, which enables the use of financial services like borrowing and lending without going through banking institutions or central banks. In traditional banking, borrowers are required to deposit collateral, but in DeFi they can deposit Ethereum as collateral, which leads to increased demand for ether. “

Ehsani adds that many projects that promise to redefine funding are being built on Ethereum. “However, we are also seeing many other coins and blockchains seeing explosive growth recently.

“It is becoming increasingly apparent that our traditional financial system was built for a bygone era and that cryptocurrencies have the potential to revolutionize the way our financial systems work.

“At VALR, some of our customers buy ether to keep it long term, others buy it to get involved in decentralized finance, and others still buy a little to understand what it looks like and feels like to be in a financial system to get involved that is built by the people for the people. “

Wiehann Olivier, partner and leader in digital assets at Mazars in SA, notes that the value of altcoins like ether has increased overall, due to investors being more familiar with blockchain technology and cryptocurrencies that make it possible venture away from Bitcoin to try other possible investments in digital assets that could generate higher returns.

“But keep in mind that these higher returns are due to higher volatility and therefore higher risk and higher reward,” warns Olivier.

He explains that the significant increase in the value of ether is due to many factors. However, the biggest factor is the demand for digital assets due to their use on the Ethereum and Ethereum 2.0 network.

“Ethereum has introduced certain technical standards that allow the inclusion of stable coins, non-fungible tokens and smart contracts, which serve as the basis for various initiatives, including DeFi, which aims to revolutionize the financial sector and the concept of lending and borrowing.

“Ethereum is currently also in the process of switching from Ethereum to Ethereum 2.0. One of the major changes is to do away with the consensus algorithm for proof of work and switch to proof of stake, which allows Ethereum to scale more efficiently. “