The second-largest crypto is approaching its all-time high set in November 2021

The last time ether hit a record high was in November 2021.

After bitcoin’s latest push to record highs, ether is finally closing in on its own.

Both cryptocurrencies have been riding a wave of risk-on sentiment and growing institutional interest, but analysts say ether may have the stronger tailwind. The second-largest cryptocurrency has emerged as a prime beneficiary of this summer’s favorable regulatory shifts for the crypto industry, they noted.

“More narratives are playing into ether right now,” Shubh Varma, co-founder and chief executive at crypto research platform Hyblock Capital, said in a phone interview.

He called ether’s rally “the catch-up trade,” noting that the crypto last set a record at $4,865.81 in November 2021. Bitcoin, in comparison, has already broken its all-time high several times this year, most recently reaching $123,165.67 on July 14.

Ether was trading at around $4,715 on Wednesday afternoon, about 3% below its record high, according to the Dow Jones Market Data. The crypto has surged 29% over the past five days and was up 41.9% year to date. Bitcoin was changing hands near $122,536 on Wednesday, less than 0.1% from its peak, with a gain of 6.3% over the past five days and 31.2% so far this year.

Meanwhile, BlackRock’s bitcoin and ether exchange-traded funds both hit record closing highs on Wednesday. The last time both ETFs reached record levels was in December 2024 — the only time in history other than Wednesday. The iShares Bitcoin Trust (IBIT) was launched in January 2024, while the iShares Ethereum Trust (ETHA) began trading in July of that year.

What’s driving the crypto rally 

Both bitcoin and ether have drawn strength from risk-on sentiment after a broadly in-line inflation report strengthened expectations for a September interest-rate cut by the Federal Reserve, said Mark Pilipczuk, research analyst at crypto benchmark administrator CF Benchmarks.

Fed-funds futures traders were pricing in a 91.8% chance of a 25-basis-point cut in September, up from 57.4% a month ago, according to the CME FedWatch Tool. Lower rates tend to boost appetite for assets that are perceived as risky, including cryptocurrencies.

U.S. stocks also ended higher on Wednesday — with the Dow Jones Industrial Average up 1%, the S&P 500 gaining 0.3% and the Nasdaq Composite rising 0.1% .

Another lift for crypto has come from corporations adding bitcoin and ether to their balance sheets, according to Eric Rose, head of digital-asset execution at StoneX Digital. However, he noted in emailed comments that while bitcoin has historically been the go-to choice for corporate treasury holdings, some of that demand now appears to be shifting toward ether and solana.

Why ether is leading

Ether’s recent outperformance has been partly supported by the Pectra upgrade — Ethereum’s biggest blockchain upgrade since 2022, completed in May, which laid the groundwork for the network to become cheaper and faster, said Luke Nolan, senior research associate at CoinShares. Ether is the native cryptocurrency based on the Ethereum blockchain.

Ether also gained momentum from the July passage of the Genius Act, the first federal U.S. legislation regulating stablecoins, Nolan wrote in emailed comments. Stablecoins are cryptocurrencies pegged to another asset, often the U.S. dollar, and are widely used for trading and payments in the crypto ecosystem.

Investors expect the law to accelerate stablecoin adoption, which could in turn support Ethereum. The network hosts roughly half of the stablecoin market by value and holds about 54.8% of the market share in tokenization, according to data from DeFiLlama.

Bloomberg, CoinShares