Ethereum hits new record high above $3,400, extending its more than 300% rally this year

Ethereum hits new record high above $3,400, extending its more than 300% rally this year

GUANGZHOU, China — Ether, the digital coin linked to the Ethereum blockchain, hit an all-time high of $3,456.57 as the cryptocurrency extends a rally that has seen its price gain over 350% this year.

The digital coin pared some of those gains in Tuesday morning trade in London and was trading at $3,369.74 at 11:20 a.m., according to CoinDesk data.

Interest in cryptocurrencies has surged over the past year with bitcoin continuously pushing new record highs. A number of factors including rising institutional interest and major companies such as Tesla buying the digital coin have been credited with its rise.

Bitcoin has been described as “digital gold” or a store of value in times of geopolitical tumult or financial market volatility as well as a hedge against inflation.

But Ethereum is different. It acts more as a platform that developers can build apps on. Ethereum is the name of the network or underlying blockchain technology, while ether is the digital currency used to power the platform.

‘Speculative excess’: ethereum finds new peak in sizzling crypto market

ETH hits new record of $3,457, ETH/BTC at nearly three-year high.

Cryptocurrency ether rose to afresh record peak on Tuesday before dropping sharply as some investors pulled profits from a white-hot market bulging with questionable new entrants.

A day after blowing past $3,000 for the first time, ether, the token traded over the ethereum blockchain, hit $3,457.64 on the bitstamp exchange before dropping 6% to $3,244.

That still leaves it with a gain of some 340% this year. Therise is in part a spillover from flows into bitcoin, which has grown in stature as big-name investors from Elon Musk’s carmaker Tesla to Wall Street investor Stanley Druckenmiller buy in.

New crypto coins proliferate

It is also being driven by a speculative frenzy in the assetclass. Joke cryptocurrency dogecoin is up by 9,000% this year to put the sum of its tokens on issue at over $54 billion. Other new tokens have proliferated, and buyers this week piled in to several tiny new coins promoted by porn stars.

“What we’re seeing right now is the definition of speculative excess,” said IG Markets analyst Kyle Rodda, who likened it to the tech-bubble mania of two decades ago.

“There’s money being thrown at anything in the cryptospace,” he added.

With a market capitalisation of $376 billion, traders are taking the gains in ether much more seriously and say it is catching up to bitcoin’s rise and that upgrades to the ethereum blockchain stand to make it more useful.

BTC dips 3% to $55,625

Against bitcoin the value of ether has more than doubled this year and it touched a more than two-and-a-half-year high early on Tuesday. Bitcoin, which is up 90% this year dipped to $55,625 while the U.S. dollar firmed slightly elsewhere.

Cryptocurrency Ether hits all-time high

Ether, the digital coin traded on the Ethereum blockchain and the world’s No. 2 cryptocurrency, hit a new all-time high of $3,456.67 (€2,877) on Tuesday, after breaking the $3,000-mark for the first time on Monday in a rally that could spell trouble for big brother Bitcoin.

After hitting the record high in Asian trading, Ether then fell 3% to $3,182.11 the same day.

The development is a change of pace in a year that has been largely focused on Bitcoin. Bolstered by growing institutional interest and pandemic-induced financial uncertainty, the world’s No. 1 cryptocurrency has gained 100% since January.

Riding the same trends, lesser-known Ether has quietly gained more than 360% over the same period. Ever more investors are betting that the blockchain technologies underpinning Ethereum will allow it to eventually overtake Bitcoin. The Ether/Bitcoin cross rate — that is, the exchange rate of two currencies as expressed in a third currency, like the US dollar — has risen more than 100% this year.

A contender for the crown

“At first, 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,” James Quinn, managing director at Q9 Capital, a Hong Kong cryptocurrency private wealth manager, told Reuters.

“But as the rally has matured over the last six months, you have DeFi and a lot of DeFi is built on ethereum.”

DeFi, short for Decentralized Finance, is a form of finance that relies on decentralized blockchain technology, as opposed to central financial intermediaries like banks. The technology uses “smart contracts,” which runs on the Ethereum blockchain. Ethereum can link the transactions to certain conditions, the so-called smart contracts. This technology has become the foundation for another blossoming digital asset — nonfungible tokens (NFTs).

Growing buzz around NFTs is another explanation for Ether’s moment in the spotlight.

NFTs function as a type of digital certificate of ownership for unique assets, like works of art, or even baseball cards or weapons used in computer games. When you buy or sell an NFT, a record of the exchange is stored on a shared ledger hosted on blockchain, the decentralized nature of which prevents forgery and fraud. This is similar to how cryptocurrencies work. Unlike cryptocurrencies, NFTs are underpinned by unique assets, making them nonfungible.

With NFTs, smart contracts can be created to, for example, automatically give an artist a share of future sales of the token. This functionality could offer greater potential than Bitcoin technology.

Ether meets EU

More traditional players are also hopping on the Ethereum train. Canada recently approved the launch of three exchange-traded funds (ETFs) that will expose investors to Ether. This comes just a few months after the country gave the go-ahead for the world’s first ETF with Bitcoin exposure.

Last week, the European Investment Bank, the EU’s lending arm, announced that for the first time ever, it had used Ethereum blockchain technology to issue €100 million in two-year digital notes.

“These digital bonds will play a role in giving the Bank a quicker and more streamlined access to alternative sources of finance to boost finance for projects across the globe,” EIB Vice President Mourinho Felix said in a statement.

Watch video 06:07 NFTs explained: Why would anyone pay $600,000 for a cat meme?

NFTs on eBay?

On Monday, the CEO of eBay said the e-commerce website was looking into accepting cryptocurrencies and considering how to facilitate the buying and selling of NFTs on its platform.

“We’re exploring opportunities on how we can enable [NFTs] on eBay in an easy way,” eBay CEO Jamie Iannone told CNBC.

“Everything that’s collectible has been on eBay for decades and will continue to be for the next few decades.”

A growing number of companies, including Tesla and PayPal, have embraced the use of virtual currencies over the past year.

In the same way that many believe Bitcoin to be overvalued, Ether is also believed to be undervalued, Naeem Aslam, chief market analyst at brokerage AvaTrade, told Reuters.

Ether currently has a market capitalization of around $364 billion, according to coindesk.com. The total value of all Bitcoin in circulation is just over $1 trillion. The oldest and most prominent cryptocurrency, Bitcoin, rose nearly 4% on Monday to $58,821.