Ether rallies to a new record above $2,500 as latest rally pushes the cryptocurrency to near a $300 billion market cap
- Ether spiked as much as 8.5% on Thursday to a new record high above $2,560.
- The rally pushes the market capitalization of ether near $300 billion for the first time.
- An expert said the latest rally is spurred by the rise of DeFi apps as they build on top of ethereum.
Ether spiked as much as 8.5% on Thursday to a new record high above $2,560, pushing the market capitalization of the cryptocurrency near $300 billion for the first time.
The second-largest cryptocurrency rose to a record high of $2,591 at around 8:30 a.m. ET Thursday. Ether thus far has surged 250% year-to-date amid a broader cryptocurrency rally led by bitcoin, whose market cap now stands at $1.1 trillion.
"We are witnessing a perfect storm for Ethereum's momentum," Sergey Nazarov, co-founder of Chainlink, an oracle network that secures over $15 billion worth of assets on the ethereum blockchain, told Insider.
Nazarov said the recent rally is spurred by the rise of decentralized finance applications, which are now worth over $59 billion.
"The thousands of developers building what is now the fastest-growing ecosystem in the entire blockchain ecosystem seems to be building their applications on top of ethereum," Nazarov told Insider.
He continued: "As more and more users pile into these DeFi applications on top of ethereum, some of which are now offering double-digital yield, there's likely increased demand for the asset, as ETH is required whenever a user wants to conduct a transaction."
DeFi is an umbrella term for various applications - lending, borrowing, trading, saving, derivatives, options, stocks - that use public blockchains and crypto assets to disrupt traditional financial sectors.
Simon Peters, a cryptoasset analyst at eToro, added that the recent momentum is ether's alone, as it slowly decouples from bitcoin.
"While the two have traded in tandem for much of the last three years, as the cryptoasset market starts to mature, investors will be looking across the broader spectrum of assets and assessing which has the best long-term potential," Peters told Insider.
Peters added that ether is a good alternative to bitcoin, especially with it lower dollar valuation. Ether also appeals to investors who want to own whole coins, he said, something far more expensive to achieve with bitcoin, which now trades more than $60,000 per coin on average.
The latest Berlin hard fork, an update to the ethereum network, and the upcoming London upgrade this summer are also pushing the price of the asset higher as it continues to offer a lot of opportunities to developers and investors."
Ether is trading 7.4% higher to 2,543 as of 10:02 a.m. ET.