The Mercury

Second-biggest cryptocurr­ency Ethereum breaks $4 000 barrier to hit a new record high


CRYPTOCURR­ENCY ethereum broke $4 000 (R56 178) for the first time yesterday, climbing to a new peak for a third day in a row on bets it may find new uses, although some analysts said it was overvalued at current levels. Ethereum, the second-largest coin by market capitalisa­tion, jumped more than 6 percent to just below $4 175, and was last up around 2 percent.

It has soared this year, fuelled by expectatio­ns of wider use, based in part on its role in decentrali­sed finance – “DeFi” – platforms that facilitate crypto-denominate­d lending outside traditiona­l banking. An upcoming technical change to its software seen as reducing its supply has also provided a boost, while new institutio­nal investors in the crypto sector have warmed to it amid a tepid quarter so far for bitcoin.

“(Crypto has) got a lot more institutio­nal involvemen­t than people who haven’t followed the market believe,” said Chris Weston, head of research at brokerage Pepperston­e. “And everyone's been in ethereum. It’s not a meme joke coin, it actually has some applicatio­n use,” he added, referring to its role in DeFi. But some analysts said ethereum’s increasing valuation was not underpinne­d by data of how widely it is used.

“The continued divergence of its price relative to network activity raise questions about its valuation,” JP Morgan analysts wrote in a report to clients dated May 7. 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.

In the crypto world, the terms “ethereum” and “ether” have become synonymous. Technicall­y, ethereum is the blockchain network in which applicatio­ns are embedded, while ether is the token or currency that enables or drives the use of these applicatio­ns.

Bitcoin, the largest cryptocurr­ency, rose to a three-week high above $59 600 yesterday.

Dogecoin, a recent outperform­er, stabilised after losses on Sunday after comments by Tesla chief Elon Musk on the Saturday Night Live TV show, where he said it was a “hustle”.

Smaller cryptocurr­encies, like Dogecoin, known as “altcoins”, have been in demand in the past few weeks, pushing bitcoin’s share of the overall $2.5 trillion digital currency market to its lowest in around two years. Dogecoin, which began as a social media joke in 2013, is up more than 700 percent in the last month.

It was last trading at $0.51, after tumbling 38 percent in the last 24 hours on Musk's comments. It later steadied after Musk’s commercial rocket company SpaceX said it would accept the meme-inspired cryptocurr­ency dogecoin as payment.

The meme-based coin has become the fourth-largest digital currency, with a market capitalisa­tion of $69 billion, according to CoinMarket­Cap. It hit a record high on Thursday above $0.73.

 ?? | Supplied ?? ETHEREUM is the blockchain network in which applicatio­ns are embedded.
| Supplied ETHEREUM is the blockchain network in which applicatio­ns are embedded.

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