The world’s second largest cryptocurrency Ether has broken past $3,000, setting a new record high in a dazzling rally that has outshone the popular bitcoin. Investors bet ether will be of greater use in a decentralized future financial system.
The token transacted on the ethereum blockchain rose 3% on the Bitstamp exchange to $3,051.99 by lunchtime in Asia. It is up more than 300% for the year so far. James Quinn, managing director at Q9 Capital, a Hong Kong cryptocurrency private wealth manager, said the big rally is a catch-up to late 2020 gains in bitcoin. “It also reflects improvements to the ethereum blockchain and a growing shift towards DeFi, which refers to transactions outside traditional banking for which the ethereum blockchain is a crucial platform.”
Quinn explained that the rally was really led by bitcoin because as a lot of the institutional investors came into the space, that would be their natural first port of call. “But as the rally has matured over the last six months, you have DeFi and a lot of DeFi is built on ethereum.”
The ether/bitcoin cross rate, as per CNBC, has soared more than 100% this year and hit a 2.5-year high on Sunday, pointing to a degree of rotation into the second biggest cryptocurrency as investors diversify their exposure. Jehan Chu, managing partner at Hong Kong blockchain venture capital firm Kenetic Capital, said surging DeFi volumes continue to push ethereum prices higher as investors gain confidence in crypto and see ethereum as a safe second-place asset.
Moreover, the launch of ether exchange-traded funds in Canada and surging demand for ether wallets to transact non-fungible tokens such as digital art have also pushed up the price.
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Last week, Bloomberg reported that the European Investment Bank plans on issuing a digital bond over the Ethereum blockchain, while JP Morgan plans a managed bitcoin fund.