Ether is outperforming bitcoin on its way to an all-time high set in May.
Ether, the world’s second-largest cryptocurrency by market value, reached the $4,000 level and is up about 20% over the past week, compared with a 2% rise in bitcoin over the same period. Technical charts suggest ETH is poised to continue higher towards the all-time high around $4,300, set on May 12 before a nearly 60% sell-off.
In August, the Ethereum blockchain underwent a hotly anticipated upgrade dubbed the London hard fork. The upgrade contributed to a price breakout above $2,900, which also coincided with a rise in the ETH/BTC ratio above 0.07.
The resurgence in non-fungible token (NFT) activity and interest in yield-generating decentralized finance (DeFi) tokens have also contributed to ETH’s price rally.
“The quantity of ETH tokens being locked into DeFi is rising. This is placing added pressure on the supply of the cryptoasset as more tokens become essentially unavailable to the market for trading,” Simon Peters, cryptoasset analyst at multi-asset investment platform eToro, wrote in an email to CoinDesk.
“ETH staking is growing. Currently, around 7.2 million ETH are staked, which equates to around 6% of ETH tokens, again limiting supply,” Peters wrote.
The ether price has increased more than fivefold this year, pushing ether’s market capitalization to $471 billion.