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Ether hit its highest since mid-May on Wednesday, swept higher by a wave of investors chasing gains in popular alternatives to bitcoin that have rallied sharply in recent weeks.
Ethereum’s ether token rose by as much as 7% at one point to a high above $3,560. It was last up around 3% at $3,530.
Although bitcoin is still the most actively traded cryptocurrency, many of its smaller rivals, such as ether, the cardano network’s ada or polkadot’s dot are gaining in market size. These smaller blockchains offer a wider range of applications than bitcoin’s, including decentralized finance protocols and NFTs among others.
NFTs are digital tokens that are tied to real world assets such as pieces of artwork, videos and more.
The largest NFT platform, OpenSea, recorded the highest monthly activity of all time in August, with over $3 million worth in volume, according to data from analytics firm Dune. This is 10 times more than the previous month as more celebrities, sports players and luxury brands released their own NFTs.
Decentralized finance, or DeFi, is one of the applications of blockchain technology that has made the likes of the ethereum network so popular lately. DeFi allows two parties to transact without any kind of centralized intermediary, like a broker, or commercial bank, for example.
“The attractive factor driving behind the growth of ethereum is the DeFi and NFT mania currently making the buzz in the crypto ecosystem. With most NFTs being minted on the ethereum blockchain, the demand for ether is higher, and the uplift in price is further complemented with the high token burn rate ushered in by the last London hard fork network upgrade,” Petr Kozyakov, co-founder and CEO of the global payment network Mercuryo said.
Ether is the second largest coin by market capitalization after bitcoin, according to coinmarketcap.
“Ether could go beyond the $4,000 price mark as it has done so before when it hit an all-time high record of $4,362.35,” Kozyakov said.
The rally in ether has helped push up the values of smaller altcoins, he said.
Dot rose 8.7% on the day to $30.21, having touched an all-time high of $32.10 earlier on, based on Coinbase data.
Other altcoins like Chainlink’s link rose by 6.21% to $27.58, Ripple’s XRP gained 7.43% to $1.20 and Uniswap’s uni token rose 8.29% to $30.48 in 24 hours, according to coinmarketcap.
“The cryptoverse continues to grow and while bitcoin dominance is fading as other coins dominate the embracement of blockchain technology, long-term investors should be upbeat for the entire space,” Edward Moya, a senior market analyst at broker OANDA, said in a note on Tuesday.
Solana’s sol token, which has gained almost 250% in the last month, was last up 10% on Coinbase at $119.46, while cardano’s ada, now the third biggest coin by market value, was up 2% on Coinbase at $2.829.
“Sol and ada have the inherent potential for massive price gains in the coming months,” Kozyakov said. “(Their) potential claims to be ethereum killers will soon be tested out with (cardano’s) Alonzo upgrade that will allow smart contracts to build on the network.”