Over the past 30 days, the Ethereum price has risen from $83 to $150, by 80 percent against the U.S. dollar in a strong corrective rally. On January 2, following a seven percent increase in its price, Ethereum (ETH) surpassed Ripple (XRP) to reclaim its throne as the second most valuable cryptocurrency in the global market.
Two main factors have likely contributed to the short-term surge in the price of Ethereum in the past month: oversold conditions and the upcoming Constantinople fork. From early November to mid-December, Ethereum experienced a steep decline in value as its price fell from $220 to $83. Despite its recent 80 percent climb, the asset is yet to achieve November levels and would still have to increase by an additional 46 percent to rise back to $220.
The market demonstrated oversold conditions subsequent to the sudden decline in the price of Ethereum from November to December, relieving sell-pressure on the crypto asset and allowing the asset to recover. The reduction of the block rewards of ETH restricts the amount of ETH miners can generate, which in the long-term will lead to a gradual decline in the potential circulating supply of ETH. As the supply of ETH goes down and the demand goes up or remains the same, the ETH price is expected to increase. ETH remains as one of the best-performing assets in December 2018, outperforming Bitcoin, Ripple, and Bitcoin Cash. However, the valuation of the cryptocurrency market still remains at $130 billion and it is far from recovering to previous highs and as such, it is still too early to conclude that ETH has started to enter a mid-term bull rally.