Ethereum rose sharply on Wednesday, overtaking XRP for second spot on the crypto market ranking for the first time since November. Gains in the broader cryptocurrency market were also apparent through the early morning as trade volumes rebounded from the holiday lull.
The ether price jumped 12.5% to $153.10, its highest since Christmas Eve. In doing so, ether pushed out of a narrow trading range that had capped price action below $140 for the duration of the holiday period. More importantly, it allowed the so-called developer’s cryptocurrency to overtake XRP for second spot in the market cap rankings.
At the time of writing, Ethereum had a total market value of $15.9 billion, according to CoinMarketCap. XRP, which rose 3.8% on Wednesday, was valued at less than $15.1 billion.
Hacked has been closely monitoring the race for second spot behind bitcoin. The so-called “flippening” between XRP and Ethereum was first observed in September when each blockchain was valued at more than $23 billion. XRP flipped ether again in November in a more convincing fashion.
Several factors have contributed to XRP’s relative strength over the past three months. The protocol has not only managed to weather the crypto downturn better than its peers, an apparent existential crisis for Ethereum only widened the divergence. Ethereum has faced threats of economic abstraction, growing competition in the smart-contract space and the apparent fallout from the ICO craze of 2017.
Factors Behind the Rally
Ethereum has gained a whopping 80% over the past month, pushed higher by a myriad of forces both technical and fundamental in nature. On the one hand, ETH benefited from the broad recovery that began on Dec.17, the one-year anniversary of bitcoin’s $20,000 bull run. Like its peers, ether rallied on oversold conditions after prices crashed to 18-month lows.
The cryptocurrency is also benefiting from optimism tied to its upcoming Constantinople fork, which is expected to bring much-needed upgrades to the protocol. The fork, which is scheduled for Jan. 16, has boosted demand for ether by lowering the block reward to 2 ETH from 3 ETH currently. This will have a direct influence on ETH supplies.
An evaluation of past forks of the Ethereum network proved to have a similar impact on prices. As cryptocurrency trader Alex Kruger notes, the Homestead fork of ETH triggered a price rally of 1,150% in the two months prior to the event. The market began a major pullback on the day that Homestead was activated. This means there’s a good chance ether will experience a broad pullback later in the month when Constantinople goes live.
For the time being, ether is enjoying a steady uptick in trading volumes. Turnover in the various ether markets approached $3 billion on Wednesday. That represents 20% of total market turnover for cryptocurrencies as a whole.