Why ether’s 349% rally this year is less hype-driven than previous bull cycles, according to one crypto researcher

Founder of Ethereum Vitalik Buterin during TechCrunch Disrupt London 2015

John Phillips/Getty Images for TechCrunch

Ether's current rally is less hype-driven and based more on fundamentals than in previous cycles as investors begin to understand Ethereum's role in decentralized finance, according to Coindesk's managing director of research Noelle Acheson.

The cryptocurrency built on top of the open source Ethereum blockchain hit a new all-time high above $3,100 Monday morning in its ninth straight day of gains.

That takes its year-to-date gains to more than 300%, far exceeding bitcoin's 95% rise in 2021.

While Acheson said part of the price movement upward is likely driven by investors eyeing the round number of $3,000 and jumping in, it's nothing like the momentum trading Ether saw from retail investors in 2017 during its last bull cycle.

"This time around there seem to be more professional investors involved…and the retail market is better informed about crypto more broadly," Acheson told Insider.

When Ether reached $1,000 in 2017, just two years after the coin began trading publicly, it was very "inflated" given the fact that Ethereum network didn't have that many applications built on top of it, she said.

"Now, Ethereum is powering decentralized finance, it's powering stablecoins, it's powering part of the NFT universe," Acheson added, saying that the potential of the Ethereum network is better understood than four years ago.

Decentralized finance refers to a class of new applications that aim to replace traditional financial products – like lending and borrowing, trading, saving, derivatives, and options – through the use of decentralized tech, rather than relying on a company or bank. Ethereum was made for these "DeFi" applications to be built on top of the Ethereum blockchain.

Ether's price is also going higher as investors prepare for the Ethereum network to undergo a massive upgrade to "Ethereum 2.0" that will improve the network and make it more scalable, Acheson said.

Though she emphasized that this upgrade and further institutional adoption doesn't guarantee that the price of Ether will continue to go up.

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