Ether, the native cryptocurrency of the Ethereum network, chalked up fresh multi-year highs early on Monday after a double-digit rally last week.
At around 06:35 UTC, ether, the second-largest cryptocurrency by market value, reached $1,151 – a level last seen in January 2018, according to CoinDesk 20 data.
Prices rose over 40% last week to register the biggest weekly gain since December 2018.
“The ether slingshot has arrived and is playing catchup to big brother bitcoin,” Jehan Chu, CEO at Hong Kong-based trading firm Kenetic Capital, told CoinDesk. “While ether hasn’t established a store of value narrative, its relatively low price is becoming irresistible to Wall Street investors drunk on bitcoin gains.”
At the press-time price of $1,020, ether is still down around 43% from the record price of $1,433 observed in January 2017. Bitcoin surpassed its December 2017 peak of $19,783 last month and soared as high as $34,545. MicroStrategy and several other publicly listed companies diversified their cash holdings into bitcoin in the second half of 2020, likely boosting the crypto market leader’s price.
According to Chu, MicroStrategy’s CEO Michael Saylor and SkyBridge Capital’s Scaramucci are now playing chicken over who will first make an ether investment. “Once they make a move, we can expect a mad rush to $2,000,” he said.
John Ng Pangilinan, managing partner at Singapore-based Signum Capital, also said ether could challenge all-time highs. “Ether trading volumes are closing on bitcoin trading volumes. That shows an aggressive move by bulls into ether,” he said.
“Top-tier” exchanges have registered ether trading volume of over $19 billion in the past 24 hours, versus $16 billion in bitcoin, according to data source CryptoCompare. So, ether is now the biggest cryptocurrency by trading volume. However, its $120 billion market capitalization is still far below bitcoin’s $600 billion.
Aside from increased demand, ether seems to be benefitting from a drying up of sell-side liquidity, according to Ki Young Ju, CEO of Korea-based blockchain analytics firm CryptoQuant.
Exchange reserves of ether are down 20% compared to May 2020. The slide is likely the result of investors taking direct custody of ether or moving their coins to decentralized finance or staking on Ethereum 2.0, creating a shortage of ether supply in the market.