As with any currency, cryptocurrency is subject to peaks and troughs with value. However, it can be quite volatile at times, meaning the value can dramatically change at the drop of a hat. This is why investors and regulators consider investing in cryptocurrency to be a risk, albeit one that could be worth taking if you know what you’re doing and you can afford to lose the money you invest. This is different to a traditional investment such as buying shares, where capital preservation is a key objective. Many see buying crypto as a ‘call option’ on a 10x future surge in prices, fully accepting the risk of losing all capital if this bet doesn’t pay off.

One currency that’s seen quite a positive change recently is Ethereum (ETH), with its value skyrocketing over the last year. Precisely why is this happening, though?

A turbulent few years

Whereas Bitcoin (BTC) has seen quite a few highs in the last few years, the same hasn’t been the case for other cryptocurrencies. After hitting a $1,200 peak in 2018, Ethereum experienced several turbulent years, barely rising more than a few hundred dollars.

However, the tide has been turning over the last year, with ETH reaching peaks of over $4,000 in May 2021. The change is notable, especially because in percentage terms, it’s significantly exceeded that of Bitcoin. The other cryptocurrency may have a much bigger value, but it’s also been in something of a slump while Ethereum has been excelling.

It’s all about technology

The main reason that Ethereum and Bitcoin have seen different levels of success is down to how they use the blockchain. The best cryptocurrency books will help you understand the subtle but important technical differences between these two emerging cryptoassets. The former is more of an open-source software platform than a currency, with its success tied to technological developments.

The potential that Ethereum’s underlying technology can offer holds a lot of hope for the future and is largely why it’s done so well recently. Developments from the last few months include an update that can help reduce ETH gas prices and the introduction of a smart contract protocol. The arrival of these has excited many traders, making them eager to throw a lot of attention Ethereum’s way and help its value soar.

It’s not hard to get involved with this yourself when services like Paxful allow you to buy ETH using hundreds of different methods like bank transfers and even gift cards. Whether you’re an established trader or new to dealing in cryptocurrency, you can easily buy or sell as you try to take advantage of the market.

Ties to decentralised finance

Although it can be hard to predict how cryptocurrencies will fare, something that is a good indicator for Ethereum is decentralized finance. If this performs well, then it logical to believe that good things could happen to the value of ETH.

That’s because this software platform facilitates decentralized finance applications, so the ties between the two are strong. It’s a similar situation with decentralized commerce, with Ethereum allowing developers to launch non-fungible tokens (NFTs) on the platform. These have also seen a lot of interest recently, which helps to explain why Ethereum’s luck has improved significantly compared to this time last year.

Could Ether be the best cryptocurrency to invest in now? Although Ethereum has already fallen since hitting its latest peak, insiders expect things to turn around again within the year. With the Ethereum network set for a significant upgrade soon, it’s believed the changes this will bring will help the platform’s value rise even higher. That means investing in ETH right now could be a wise move.