Cryptocurrency Ether surpassed $ 3,000 (S $ 4,000) on Monday (May 3) to hit a new record high in a dazzling rally that has surpassed the larger Bitcoin as investors bet Ether in a decentralized one will be more and more useful to the future financial system.
Ether, the token that ran on the Ethereum blockchain, rose 3 percent on the Bitstamp exchange to $ 3,051.99 by midday in Asia.
It has risen by more than 300 percent in the year to date, significantly outperforming the more popular Bitcoin by 95 percent.
In part, the big rally is catching up on bitcoin gains from late 2020, said James Quinn, managing director of Q9 Capital, a private cryptocurrency asset manager in Hong Kong.
It also reflects improvements in the Ethereum blockchain and an increasing shift towards “DeFi” or decentralized funding that refers to transactions outside of traditional banking for which the Ethereum blockchain is a critical platform.
“Initially, the rally was really led by Bitcoin as a lot of institutional investors came into the room, which would be their natural first port of call,” Quinn said.
“But since the rally has matured over the past six months, you have DeFi and a lot of DeFi is Ethereum based.”
The launch of exchange-traded ether funds in Canada and the increasing demand for ether wallets for handling non-fungible tokens such as digital art have also pushed the price higher.
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The ether / bitcoin cross rate has soared more than 100 percent this year, hitting a 2.5-year high on Sunday. This suggests some rotation into the second largest cryptocurrency as investors diversify their exposure.
“Rising DeFi volume continues to drive Ethereum prices higher as investors gain confidence in crypto and view Ethereum as a safe asset for second place,” said Jehan Chu, managing partner of the Hong Kong blockchain venture capital firm Kenetic Capital.
Bloomberg reported last week that the European Investment Bank is planning to issue a digital bond over the Ethereum blockchain, while JP Morgan is planning a managed bitcoin fund.
Bitcoin, the world’s largest crypto asset with a market cap of more than $ 1 trillion, hit the $ 50,000 mark again last week, trading at $ 58,000 on Monday, an increase of around 3 percent , but well below its record high of $ 64,895.22.
The US dollar was largely stable.
