Dado Ruvic/Reuters
- Ether hit a new record above $3,000 for the first time on Monday.
- Investors are betting interest in decentralized finance applications will propel Ethereum’s growth.
- Transactions on the Ethereum blockchain hit an all-time high of 41.7 million in April.
- See more stories on Insider’s business page.
Cryptocurrency ether, native to the Ethereum blockchain, hit a new all-time high above $3,000 on Monday in a standout performance that has outpaced rival currency bitcoin’s gains so far this year.
The token rose 6% to trade around $3,142 as of 04:00 a.m. ET. That takes its year-to-date gains to more than 300%, far exceeding bitcoin’s 95% rise in 2021.
The digital asset’s popularity is embedded in its position as the blockchain of choice for many products and services that use DeFi – or decentralized finance – applications. Transactions on the Ethereum blockchain hit a record high of 41.7 million in April.
DeFi refers to a class of new applications that aim to replace traditional financial products – like lending and borrowing, trading, saving, derivatives, and options – through the use of decentralized tech, rather than relying on a company or bank. These are typically built on the Ethereum blockchain.
Investors are betting that DeFi’s rise will spur Ethereum’s growth for two reasons, according to Sergey Nazarov, the cofounder of blockchain platform Chainlink.
“Thousands of developers are building applications that recreate traditional financial products in decentralized ways on top of Ethereum, and as more and more users pour in to interact with these apps, they require ETH to conduct any transaction,” he said in a note to Insider.
“Second, there seems to be growing institutional interest in the public Ethereum blockchain, as stakeholders play around with ways to leverage the public network. For instance, just in the past week, the European Investment Bank announced it will launch a digital bond sale on Ethereum and JPMorgan issued a report examining ETH’s historical performance.”
JPMorgan predicted last week that ether’s outperformance against bitcoin could continue. Bitcoin is more of a crypto commodity than a currency, while ether functions more as a medium of exchange, the bank said.
Billionaire investor Mark Cuban has also previously said he thinks ether’s use will spark the development of apps that will “dwarf” bitcoin.
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