Ethereum, the world's second-largest cryptocurrency in terms of market capitalisation, touched a new peak on Wednesday, with participants citing media reports about the European Investment Bank's plans to launch a "digital bond" sale on the Ethereum blockchain network.
Ether is the digital currency, or token, that facilitates transactions on the Ethereum blockchain. In the crypto world, the terms Ether and Ethereum have become interchangeable.
Bloomberg reported on Tuesday, citing unnamed sources, that the EIB plans to issue a two-year 100-million euro digital bond, with the sale to be led by Goldman Sachs, Banco Santander, and Societe Generale, according to analysts.
Ether hit a record high of $2,713.95 (€2,248.60) on Wednesday, following a more than 5 per cent rally the previous day. It was last up 1.4 per cent at $2,706.39 (€2,242.34).
Danny Kim, head of revenue at SFOX, a full-service crypto broker, said reports on an EIB digital bond issuance has "triggered a bullish institutional use case for Ethereum".
He also cited the decline in supply of Ethereum in the market, which has jacked up its price.
"The amount of Ethereum sitting on exchanges continues to drop lower and has been the lowest in the past year," Kim said. "With less supply on exchange available, there's less likely a chance of a major sell-off".
NFTs fuelling Ether demand
Demand for Ether has also risen as investors use the tokens to buy virtual art or land, in the form of non-fungible tokens (NFTs), on platforms such as SuperRare and Decentraland.
On Monday, digital currencies got a boost from reports that JPMorgan Chase is planning to offer a managed Bitcoin fund, the latest indication that what is considered by many a speculative investment is gaining institutional legitimacy.
Bitcoin, the world's biggest crypto asset with more than $1 trillion (€828.5 trilion) in market capitalisation, regained the $50,000 (€41,427) mark this week. Bitcoin was last up 1 per cent at $55,630.82 (€46,092) but well below its record high at $64,895.22 (€53,772.37) set on April 14.
On March 1, Goldman Sachs restarted its cryptocurrency trading desk, just weeks after Tesla Inc announced it had purchased $1.5 billion (€1.2 billion) in Bitcoin, sparking a rally.
But cryptos hit some resistance after US President Joe Biden unveiled plans to raise capital gains taxes, a move that could curb investment in digital assets.