Starting as a joke, Dogecoin surged more than 16,000 percent the past year but was down after Musk’s comment.
Ether, the world’s second-biggest cryptocurrency by market capitalisation, hit a new record high on Wednesday, bringing its total market capitalisation to just shy of $500bn and its gain since January to almost 500 percent.
Ether climbed to $4,370 in intraday trading on Wednesday, according to Coinbase, besting its previous record hit on Monday and bringing its total market cap to $493bn.
Ether’s rise has come on the back of increased institutional investor interest in cryptocurrencies fed by Bitcoin’s march towards becoming a mainstream form of payment.
Retail investors’ fear of missing out (FOMO) is also a factor, as celebrities and influencers like Tesla and SpaceX chief Elon Musk boost Bitcoin and other cryptocurrencies on their social media feeds.
Ether has jumped almost 500 percent against the dollar this year as the Ethereum blockchain that underpins it becomes more widely used on decentralised cryptocurrency platforms.
Blockchain technology is seen by many as a game-changer in global finance because it allows peer-to-peer transactions that don’t need to be verified by a fee-collecting middleman – like a traditional bank.
Ether’s rise has increasingly come at the expense of the world’s largest cryptocurrency, Bitcoin, which was trading down slightly at $56,240.
On Wednesday, analysts at JPMorgan Chase said the pace of evolution in the Ethereum market has “remained rapid” and that there was still room for growth.
But cryptocurrencies are famously volatile and governments around the world are wrestling with how to regulate them without stifling innovation.
On Tuesday, the US Securities and Exchange Commission (SEC) issued a statement warning investors of the potential risks surrounding Bitcoin.
“Investors should understand that Bitcoin, including gaining exposure through the Bitcoin futures market, is a highly speculative investment,” said the SEC. “As such, investors should consider the volatility of Bitcoin and the Bitcoin futures market, as well as the lack of regulation and potential for fraud or manipulation in the underlying Bitcoin market.”