Cryptocurrency Ethereum climbed to a new peak last week amidst continued optimism about further growth in decentralized finance or “DeFi.” The cryptocurrency gained this year almost 500 percent due to the growing interest in decentralized finance applications and increase in institutional interest in cryptocurrencies.
Ethereum (ETH), the second-biggest cryptocurrency by market capitalization after bitcoin, climbed to $4,372.35 on May 12, eclipsing its previous record hit on May 10 was last up 2 percent. Bitcoin rate was down a touch at $56,240 in the same period. Currently, all cryptocurrencies have been trading at a low post a rough weekend and profit booking. Bitcoin has come down to $45,000, and Ethereum was around $3191 in the week beginning May 17.
Ethereum has soared this year, fuelled by the boom in Defi, and has jumped almost 500 percent against the dollar. The ethereum blockchain is becoming more widely used by peer-to-peer — or decentralized — cryptocurrency platforms that enable crypto-denominated lending outside of traditional banking institutions.
US bank J.P. Morgan on May 12, 2021, said the pace of evolution in the ethereum market has “remained rapid” and that there was still room for growth.
Open interest in CME Ethereum futures had increased to $540 million in three months, the bank’s analysts said in a note. A similar level of open interest in CME Bitcoin futures took more than two years after listing in 2017, they added.
“Effectively, once Bitcoin futures became more accepted among institutional investors, they became more comfortable with cryptocurrencies paving the way for a more rapid acceptance of Ethereum futures,” J.P. Morgan said.
But some analysts said Ethereum’s increasing valuation was not underpinned by data of how widely it is used. US regulators warned investors on May 11, 2021, over the risks of bitcoin futures in mutual fund investments. In a statement, the Securities and Exchange Commission said bitcoin was a highly speculative market that lacked regulation.
Factors such as the number of active digital addresses in its network would be more consistent with a price of around $1,000, the US bank said.
The surge has also seen ether — which in the crypto world is also widely referred to as Ethereum — outperform bitcoin, which has almost doubled in price this year as larger investors warm to the emerging technology.