LONDON (Reuters) - Cryptocurrency ether hit a record high on Wednesday, adding to a recent surge on the back of a broader run-up in decentralised finance applications and increasing institutional interest in cryptocurrencies.
Ether, the second-biggest cryptocurrency by market capitalisation after bitcoin, climbed to a peak of $4,372.35, eclipsing its previous record hit on Monday, and was last up 2% on the day. Bitcoin was down a touch at $56,353.
Ether has jumped almost 500% against the dollar this year as the ethereum blockchain becomes more widely used by peer-to-peer - or decentralised - cryptocurrency platforms that enable crypto-denominated lending outside of traditional banking institutions.
The surge has also seen ether, which in the crypto world is also widely referred to as ethereum, handily outperform larger rival bitcoin, which is up about 95% against the dollar this year.
Graphic: Ether outperforms Bitcoin in 2021 - https://fingfx.thomsonreuters.com/gfx/mkt/jznpnrxalpl/Pasted%20image%201620813225573.png
U.S. bank J.P. Morgan on Wednesday said the pace of evolution in the ethereum market has "remained rapid" and that there was still room for growth.
Open interest in CME Ethereum futures had increased to $540 million in three months, the bank's analysts said in a note. A similar level of open interest in CME Bitcoin futures took more than two years after listing in 2017, they added.
"Effectively, once Bitcoin futures became more accepted among institutional investors, they became more comfortable with cryptocurrencies paving the way for a more rapid acceptance of ethereum futures," J.P. Morgan said.
The same analysts warned last week that the cryptocurrency's increasing valuation was not underpinned by data showing how widely it is used.
Factors such as the number of active digital addresses in its network would be more consistent with a price of around $1,000, the U.S. bank said.
(Reporting by Ritvik Carvalho; additional reporting by Marc Jones in London; Editing by Hugh Lawson)
