Ether’s price has surged past $2,000 as the native cryptocurrency of the Ethereum blockchain continues its yearlong bull run.
According to CoinDesk 20 data, ether hit a new record price of $2,033.08, up 6.18% in the last 24 hours, with the market capitalization of the crypto reaching $233.3 billion. The cryptocurrency is up 172.5% year-to-date.
While the price of ether hitting $2,000 would normally be a stop-the-presses-type event, it almost certainly will be overshadowed by the numerous milestones reached hours before by larger sibling bitcoin, including hitting a $1 trillion market value for the first time and rising almost $5,000 in a 24-hour period.
But ether’s rising price and surging popularity should not be overlooked. At least three growing areas of demand are fueling the increase in ether’s price: decentralized finance (DeFi), Ethereum 2.0 staking and a newly formed institutionally focused ether market on the Chicago Mercantile Exchange (CME).
Explaining ether's price rise
Often compared to oil, ether powers interactions on the Ethereum blockchain which is best known for hosting a variety of DeFi apps such as lending, trading and prediction markets. Ethereum-based applications create a natural utility for ether as the cryptocurrency is required to settle transactions. DeFi coins have followed in lockstep with ether as shown by the DeFi Pulse Index (DPI), up 83% in the last 30 days, according to Index Coop.
Staking on the Ethereum 2.0 network is also creating a supply shock of supports for the digital asset. Eth 2.0 is an in-progress redesign of the Ethereum network based on a new consensus mechanism called proof-of-stake (PoS) and database sharding. Some 2.7% of ether worth $6 billion has been deposited on the Eth 2.0 blockchain. Those funds are further locked for roughly the next 12 months.
Lastly, large investors such as investment funds may be interested in gaining some exposure to the cryptocurrency. CME launched cash-settled futures contracts for the digital asset on Feb. 8. The contracts surpassed $160 billion in aggregated volume within the first week. As the CME is one of the oldest and most trusted exchanges in the U.S., the contract launch there may signal growing institutional acceptance for ether.