What's Behind Ether's (ETH) Latest Rally

Key Points

• Ether (ETH) climbed as much as 9.3% intraday and was up about 5.2% over 24 hours as of 2 p.m.

• The gains sprang from a mix of market forces and analyst reports.

• Ether has now gained about 72% over six months and about 973% over five years, highlighting both strong returns and high volatility.

• 10 stocks we like better than Ethereum ›

Ether (CRYPTO: ETH) is skyrocketing right now. The second-largest crypto (measured by total market value) was up 5.2% in 24 hours as of 2 p.m. ET on Wednesday. The one-day jump was even larger on Wednesday morning, as the Ethereum blockchain token's rocket ride started on Tuesday afternoon. For example, it posted a 24-hour gain of 9.3% just before 8 a.m. ET today.

The big jump was powered by several smaller catalysts, working together to drive Ether's price higher.

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Three catalysts fueling Ether's surge

First, well-respected British bank Standard Chartered (OTC: SCBF.F) gave Ether an upgrade yesterday. The bank's crypto analyst bureau raised the token's year-end price target from $4,000 to $7,500, thereby boosting an already bullish forecast. Standard Chartered highlighted Ethereum-based stablecoins as a key driver of transaction fees and coin-owner value creation.

Then, Ether traders noted heavy inflows of new cash into leading Ethereum exchange-traded funds (ETFs). Large Ether purchases by top funds such as the iShares Ethereum Trust (NASDAQ: ETHA) and Fidelity Ethereum Fund (NYSEMKT: FETH) added support to the cryptocurrency's prices, and inspired other cryptocurrency investors to follow along. These funds punch way above their weight, setting the pace for the crypto market as a whole.

Lastly, a few companies are adding Ether to their balance sheets nowadays. Crypto investing specialist BitMine Immersion Technologies (NYSEMKT: BMNR) reported a $5 billion Ether stash yesterday, far outweighing the company's $18.8 million in Bitcoin holdings. If BitMine's lucrative Ether investment inspires others to follow suit, the resulting investment interest could become a self-fulfilling prophecy and drive prices much higher.

Long-term use vs. short-term hype

Ethereum and Ether aren't really designed for investors. The blockchain network is a useful tool for building apps on a global scale, designing financial tools and other programs around Ethereum's robust data security and flexible programming platform.

Many of today's largest stablecoins are actually tokens on the Ethereum blockchain, for instance. Increased real-world use of the integrated Ether token should lift the cryptocurrency's value in the long run.

This week's price gains are a mixed bag of speculation and long-term value plays. Rising investor interest helps the coin price in the short term but doesn't add much to Ethereum's long-term usage thesis. From that perspective, I would make the case that Standard Chartered's insightful analysis is more valuable than the bullish trading trends.

Either way, Ether has now gained 72% in six months and 973% in five years. The second-largest cryptocurrency is going places, and fast.

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Anders Bylund has positions in Ethereum and iShares Ethereum Trust. The Motley Fool has positions in and recommends Ethereum. The Motley Fool recommends Standard Chartered. The Motley Fool has a disclosure policy.