UPDATE 3-Ethereum jumps to record high on report of EIB digital bond issuance
(Updates record high, adds paragraph on non-fungible tokens)
By Kevin Buckland, Stephen Culp and Gertrude Chavez-Dreyfuss
NEW YORK/TOKYO, April 28 (Reuters) - Ethereum, the world’s second largest cryptocurrency in terms of market capitalisation, touched a new peak on Wednesday, with participants citing media reports about the European Investment Bank’s plans to launch a “digital bond” sale on the ethereum blockchain network.
Ether is the digital currency or token that facilitates transactions on the ethereum blockchain. In the crypto world, the terms ether and ethereum have become interchangeable.
Bloomberg reported on Tuesday, citing unnamed sources, that the EIB plans to issue a two-year 100-million euro digital bond, with the sale to be led by Goldman Sachs, Banco Santander, and Societe Generale, according to analysts.
Ether hit a record high of $2,713.95 on Wednesday, following a more than 5% rally the previous day. It was last up 1.4% at $2,706.39.
Danny Kim, head of revenue at SFOX, a full-service crypto broker, said reports on an EIB digital bond issuance has “triggered a bullish institutional use case for ethereum”.
He also cited the decline in supply of ethereum in the market, which has jacked up its price.
“The amount of ethereum sitting on exchanges continues to drop lower and has been the lowest in the past year,” Kim said. “With less supply on exchange available, there’s less likely a chance of a major sell-off.”
Demand for ether has also risen as investors use the tokens to buy virtual art or land, in the form of non-fungible tokens (NFTs), on platforms such as SuperRare and Decentraland.
On Monday, digital currencies got a boost from reports that JPMorgan Chase is planning to offer a managed bitcoin fund, the latest indication that what is considered by many a speculative investment is gaining institutional legitimacy.
Bitcoin, the world’s biggest crypto asset with more than $1 trillion in market capitalisation, regained the $50,000 mark this week. Bitcoin, was last up 1% at $55,630.82 but well below its record high at $64,895.22 set on April 14.
On March 1, Goldman Sachs restarted its cryptocurrency trading desk, just weeks after Tesla Inc announced it had purchased $1.5 billion in bitcoin, sparking a rally.
But cryptos hit some resistance after U.S. President Joe Biden unveiled plans to raise capital gains taxes, a move which could curb investment in the digital assets. (Reporting by Kevin Buckland in Tokyo, Stephen Culp and Gertrude Chavez-Dreyfuss in New York; Editing by Aurora Ellis and Jacqueline Wong)
Goldman Sachs Group (GS) - Ethereum Hits New ATH As European Investment Bank Issues Two-Year Digital Bond On ETH Blockchain
What Happened: Ethereum reached a new all-time high of $2,675 on Tuesday, gaining nearly 10% overnight and pushing its market cap past $307 billion.
Just as the second-largest cryptocurrency set a new price record, the European Investment Bank (EIB) announced plans to offer a two-year digital bond on the Ethereum blockchain.
According to Bloomberg, EIB plans to price 100 million euros ($121 million) of two-year notes in an inaugural sale of these digital bonds. The notes will reportedly be registered on the public Ethereum blockchain network using distributed ledger technology and will be priced on Tuesday.
EIB has also mandated Goldman Sachs Group Inc (NYSE:GS), Banco Santander SA (BME: SA), and Societe Generale SA (EPA: GLE) as the joint-lead managers for its inaugural sale.
Why It Matters: This isn’t the first time the Ethereum blockchain has been used in the process of issuing a bond. In April 2019, Societe Generale SFH issued 100 million euros of covered bonds as a security token on the Ethereum blockchain.
“This live transaction explores a more efficient process for bond issuances. It proposes a new standard for issuances and secondary market bond trading and reduces cost and the number of intermediaries.”, stated the bank in a press release.
With the European Union’s investment arm issuing debt on Ethereum, market proponents viewed the development as a bullish catalyst for the network.
In the eyes of the Ethereum community, including global macro investor Raoul Pal, the move was an acknowledgment of Ethereum as a legitimate financial infrastructure.
Ethereum on a high after European Investment Bank’s $121M digital bond news
Ethereum prices skyrocketed to a new all-time high on Wednesday on the back of positive news from the European Investment Bank.
Ethereum has climbed to $2,709 during early Asian trading on Wednesday, April 28, marking a new peak price for the asset according to Coingecko.
The crypto metrics provider reports a gain of 7% over the past 24 hours, and 15.7% over the past seven days for the world’s second-largest digital asset by market capitalization. The move has pushed the ETH market cap to a record $312 billion.
While there are a range of factors propelling the Ether price, Reuters today attributed it to the news the European Investment Bank is launching a “digital bond” sale using the Ethereum network.
The EIB is issuing a two-year 100 million Euro ($US120.8 million) digital bond, with the sale to be led by Goldman Sachs, Banco Santander, and Societe Generale, according to analysts at Bloomberg.
European Investment Bank is issuing 2 year digital bonds on Ethereum through Goldman, Santander, and Societe.
Wow. @GoldmanSachs #Ethereum @RaoulGMI pic.twitter.com/kaQIrZ9C9V — Michael Tant (@MichaelTant3) April 27, 2021
On April 23, Societe Generale announced that its subsidiary Societe Generale SFH had issued a 100 million Euro bond as a security token on the public Ethereum blockchain. It was awarded the top triple-A rating by Moody’s and Fitch.
Head of revenue at crypto broker SFOX, Danny Kim, told Reuters that the news has demonstrated a bullish institutional use case for Ethereum, adding that exchange balances are also decreasing adding to the bull case:
“The amount of Ethereum sitting on exchanges continues to drop lower and has been the lowest in the past year. With less supply on exchange available, there’s less likely a chance of a major sell-off.”
If you are not extremely long $ETH and Web3 at this point, it will probably be a rough decade for you
Tradfi banks beginning to issue digital bonds on ETH is unbelievable — Sisyphus (@0xSisyphus) April 27, 2021
As reported by Cointelegraph, a revival in DeFi related protocols and tokens, coupled with a fall in gas prices could also be driving momentum. At the time of writing the average transaction price on the network had fallen to $10.73 according to Bitinfocharts.
Popular crypto analyst ‘Altcoin Sherpa’, meanwhile, predicted that ETH would continue to outperform BTC in the coming weeks, targeting a price of $3,000.