Media reports about the plans of the European Investment Bank to launch a “digital bond” sale on the ethereum blockchain network encouraged investors in this digital currency – the second largest of the world in terms of market capitalization which propped up the value of ethereum to touch a new peak on Wednesday.
Ether is the digital currency or token that facilitates transactions on the ethereum blockchain. The terms ether and ethereum have become interchangeable in the crypto world.
There were reports on Tuesday that the EIB was making plans for issuing a two-year 100-million euro digital bond as reported by Bloomberg. The reports also said that the Goldman Sachs, Banco Santander, and Societe Generale were to lead the sale. The report quoted unnamed sources.
Following this report, the value of ether hit an all-time high of $2,713.95 on Wednesday after seeing a 5 per cent rise in its value in the previous day. It was last valued at $2,706.39.
The reports on an EIB digital bond issuance has “triggered a bullish institutional use case for ethereum”, said Danny Kim, head of revenue at SFOX, a full-service crypto broker. He also added that the price of the digital currency also rallied because of the decline in the supply of ethereum in the market.
“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.”
Investors in ether make use of the digital currency for purchasing virtual art or land, in the form of non-fungible tokens (NFTs), on online platforms and websites such as SuperRare and Decentraland wihc has also increased the demand for the digital currency according to analysts.
Earlier in the week on Monday, there were reports in the media about the plans of JPMorgan Chase to offer a managed bitcoin fund which also boosted digital currencies as a whole. These reports provided analysts and crypto investors the latest signals that trading and investing in crypto assets is gaining institutional legitimacy and is slowly moving away from it being viewed as a speculative investment instrument.
Earlier this week, the largest crypto currency of the world bitcoin which has a total market capitalizaiton of more than $1 trillion pared back to the $50,000 mark in value. There was a 1 per cent gain in the crypto asset in the as it touched $55,630.82 but was still well below its record high at $64,895.gthat it had achieved on April 14.
Its crypto currency trading desk was restarted by Goldman Sachs on March 1 which was preceded an the announced by the United States based electric car maker Tesla a few weeks back by that it had purchased bitcoin worth $1.5 billion which triggered a rally in the crypto currency.
However after the US president Joe Biden unveiled plans of raising capital gains taxes, there was a hit to crypto currencies as such a move by the US administration could restrict investors investing in the digital assets.
(Adapted from EconomicTimes.com)