The cryptocurrency ether hit a fresh all-time high on Friday, surging past $1,700 for the first time.
Ether, which is the world’s second-largest digital coin by market value, climbed 11.2% to a price of $1,743 at around 10:30 a.m. ET, according to data from CoinDesk.
It comes after bitcoin, the most valuable virtual currency, hit a record high close to $42,000 last month.
Bitcoin more than quadrupled in price over the course of 2020, and is up 29% since the start of 2021. Ether has risen about 129% year to date.
Ether has been steadily rising this week as investors await the highly anticipated launch of ether futures contracts from the Chicago Mercantile Exchange next week.
Trading in ether futures is set to start Monday. The CME launched bitcoin futures over three years ago, at the peak of that cryptocurrency’s 2017 rally.
Some investors believe that futures and other crypto-focused derivatives products will give institutional investors more confidence to invest in the space.
“Bringing more financial instruments will bring more participants into the market,” said Sachin Patodia, a partner at Avon Ventures, a venture capital fund affiliated with the parent company of Fidelity. “That probably is positive for the ether price.”
But Patodia said a big driver of the price of ether — and other smaller digital currencies — was the momentum for bitcoin in recent months.
“We’ve seen this pattern over many crypto cycles that we’ve gone through, where bitcoin leads the way in price movement and then you see what we call the alt-coins get carried along,” he said.
Ethereum, ether’s network, was created after bitcoin in 2013. The main difference it has with bitcoin’s blockchain is the ability to support applications.
“This move by the CME may spark further buying of ether by new entrants to the market because it provides a way for sophisticated investors to hedge their risk against positions that they may be holding on the underlying asset,” Simon Peters, a cryptoasset analyst at online investment platform eToro, told CNBC.
“However, it is worth noting that, like bitcoin, CME ether futures will be cash settled so as not to involve any physical delivery, so we shouldn’t necessarily expect a major impact on spot prices.”
Crypto investors said another factor potentially boosting ether was the start of a major upgrade to the Ethereum blockchain, called Ethereum 2.0. Believers in ether hope the upgrade will make Ethereum faster and more secure.
The total market value of all cryptocurrencies combined hit $1 trillion last month, as bitcoin’s price surged to records. Bitcoin bulls say it’s gotten a boost from institutional demand, as well as the perception that it is a store of value similar to gold.
Bitcoin was up 4.7% in the last 24 hours, trading at a price $38,151. XRP, the third-largest digital token, climbed 10.7% to 44 cents.
But skeptics like economist Nouriel Roubini say bitcoin and other cryptocurrencies have no intrinsic value. A recent Deutsche Bank survey found investors view bitcoin as the most extreme bubble in financial markets.
