Ether prices have enjoyed some compelling gains lately, breaking through the $3,500 level earlier today and approaching $3,800 this afternoon.
The world’s second-most valuable digital currency by market value reached $3,789.00 around 12:45 p.m. EDT, CoinDesk figures show.
At this point, it was trading at its most elevated value since May 16, additional CoinDesk data reveals.
Further, it was up more than 100% after falling to nearly $1,700 in late June.
[Ed note: Investing in cryptocoins or tokens is highly speculative and the market is largely unregulated. Anyone considering it should be prepared to lose their entire investment.]
Several analysts weighed in on the digital asset’s recent strength, speaking to the various factors helping drive it higher.
“Ether has continued to rise for a number of reasons, creating the perfect storm for price appreciation,” said Scott Melker, a crypto investor and analyst who is the host of The Wolf Of All Streets Podcast.
“Investors and believers continue to stake their coins in advance of Ethereum 2.0, and on countless CeFi platforms for yield, dramatically reducing the supply,” he noted.
“The enactment of the London Hard Fork and EIP-1559 have created a supply side shock, with the burning of 500M in coins in the first few weeks. Eth inflation is actually less than that of BTC at the moment.”
“Further, supply is being locked in DeFi and being traded for NFTs, which are in a massive boom cycle,” he said.
Jesse Proudman, co-founder and CTO of crypto hedge fund Strix Leviathan, also weighed in, commenting on how the growing visibility of NFTs and the increasing usage of DeFi have helped fuel gains.
“Today’s ETH surge is a perfect storm of both the explosion of interest in the NFT space, and the rising usage of DeFi protocols as people look to put their crypto to work in markets that have largely been range bound for several weeks.”
Sean Rooney, head of research at Valkyrie Investments, offered a similar take.
“The explosive growth of the DeFi ecosystem is the main factor for recent price strength in ether. NFTs have taken center stage in recent months as the market begins to better understand real world use cases.”
“What started as a discussion about digital art has transformed into communities and a new economy for artists and creators using programmable tokens,” he added.
“The trajectory for DeFi and NFTs is up, along with the price of ether.”
One factor several experts cited as helping drive ether’s upside was the growing interest of institutions.
“Ether is by far the most attractive asset for Institutional investors who are putting more and more cash into digital assets,” said Charlie Silver, CEO & Chairman of Permission.io.
“With regulatory clarity being signaled you are seeing these big moves driven by smart professional money.”
William Noble, the chief technical analyst of research platform Token Metrics, also chimed in.
“Institutional involvement in DeFi is dramatically above year-ago levels,” he stated.
“ETH is telling you that the dawn of DeFi as a mainstream tool for institutional investors is here,” said Noble.
John Iadeluca, founder & CEO of multi-strategy fund Banz Capital, also offered some perspective on this subject.
“Institutions are further embracing Ether as a long-term investment, many of which are recently now opening their eyes to staking and passive validator rewards. Ethereum 2.0 staking provides institutional investors with an uncorrelated return stream, which blends perfectly with many institutional investment portfolios.”
Some of the market experts who contributed for this article also offered technical analysis.
Jake Wujastyk, chief market analyst of TrendSpider, described today’s price increase as probably being “a simple technical breakout as the chart has been setting up for a larger move over the last several weeks.”
“On the weekly candle, there was a large volume shelf shown by using TrendSpider’s volume by price tool forming. These ‘shelves’ can create a base for the price to move up off of, which is exactly what happened.”
Other market observers pointed out crucial technical levels that traders should monitor.
“Observers should watch out for the key resistance level at $4,000, as well as rising selling pressure close to Ethereum’s previously attained all-time high in the $4,150-$4,200 areas,” said Iadeluca.
Melker weighed in, offering a different point of view.
“From a technical perspective, it is effectively clear skies until the previous all time high around $4,400, as long as Ethereum holds the $3,600 and $3,300 areas as support.”
Disclosure: I own some bitcoin, bitcoin cash, litecoin, ether and EOS.