A cryptocurrency called ether hit an all-time high on Monday, prompting its market capitalization to exceed $2 billion, a feat only has managed to achieve in the digital currency world.
Ether runs on an underlying technology called Ethereum, which is a different blockchain to the one that powers bitcoin. Each blockchain – or decentralized ledger – has their own property, but a recent rally in bitcoin has prompted traders to look at other cryptocurrencies to invest in.
The price of one ether was $28.26 at the time of publication, but hit a high of just over $30 on Monday, according to price tracking website CryptoCompare. This marks a roughly 20 percent rise in price from just a week ago on March 6. In that period, the market cap of Ethereum has risen from $1.8 billion to more than $2.57 billion.
One major reason for the rally in ether is traction among big corporates for the underlying technology Ethereum. An organization called the Enterprise Ethereum Alliance was recently set up to connect large companies to technology vendors in order to work on projects using the blockchain. Companies involved in the launch include JPMorgan, Microsoft and Intel. This has added legitimacy to the cryptocurrency but also requires ether to be transferred and stored in order to access applications using Ethereum, according to Aurélien Menant, founder and CEO of Gatecoin, a blockchain assets exchange based in Hong Kong.
"This provides more reason to value ether at a higher price than its recent levels," Menant told CNBC via email on Tuesday.
Alternative digital currency bitcoin in comparison has a market capitalization of over $20 billion and one bitcoin is worth $1,235.83 at the time of publication. But it has been around for longer and has had a chance to mature. But ether is the only cryptocurrency other than bitcoin that has managed to hit a $2 billion market cap. In comparison, alternative digital currency Dash has a market capitalization of $556.9 million, while Monero is worth $248 million, according to price tracking website Coinmarketcap.com.
Some experts have suggested that bitcoin could hit $3,000 this year but the market was watching a key decision last week which did not go the way traders wanted. The U.S. Securities and Exchange Commission on Friday rejected a request by Cameron and Tyler Winklevoss to list a bitcoin exchange-traded fund on the market. It would have been the first product of its kind and brought more investors into the bitcoin market.
This caused a plunge in the bitcoin price on Friday when the decision was announced but it has slowly recovered. Bitcoin is still off its all-time of over $1,300, which was reached ahead of the SEC decision. The bitcoin rally however, has also supported ether.
"With the recent bull run on bitcoin due to the anticipation of the SEC decision on the bitcoin ETF, traders had more bitcoin purchasing power that they could use to exchange for other blockchain assets such as ether. With the ETF rejection, ether benefitted from this liquidity spillover, as traders saw more value in exchanging bitcoin for another cryptocurrency, with long-term promise, rather than fiat," Menant said.