The cryptocurrency has surged over 300% this year alone.
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Ether, the token used in the Ethereum blockchain, jumped 3% on the Bitstamp exchange, reaching approximately $3,145 earlier in the day in London. The price reflects a 325% spike this year so far. In comparison, Bitcoin has only jumped 95%.
James Quinn, managing director at Hong Kong cryptocurrency private wealth management firm Q9 Capital, told the news wire that the increase can be partially attributed to a shift toward “DeFi” or decentralized finance. Decentralized finance is a system in which financial products are accessible on a public decentralized blockchain network, making it easier for people to make transactions without having to go through banks or brokerages.
“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,” Quinn said. “But as the rally has matured over the last six months, you have DeFi and a lot of DeFi is built on Ethereum.”
As MarketWatch notes, Ethereum traded for about $208 just a year ago. Its recent spike comes just days after the European Investment Bank announced that it had used the Ethereum blockchain to issue 100 million euros in two-year notes.
Last month, JPMorgan analysts revealed in a widely circulated letter on social media that Ethereum was also outperforming Bitcoin as a result of improvements in liquidity conditions and a higher turnover on the public Ethereum blockchain.