Ether, the world's second-biggest cryptocurrency, is closing in on an all-time high

Ether is closing in on an all-time high. The cryptocurrency, one of many alternatives to bitcoin, rallied as much as 17% on Tuesday to an intraday high of $1,439, according to data from industry site CoinDesk.

That's just shy of the $1,448 record ether hit in early 2018, when major cryptocurrencies led by bitcoin climbed to new heights before slumping sharply later in the year. Ether, the world's second-biggest cryptocurrency by market value, has almost doubled year-to-date.

Bitcoin has been in the spotlight for several months now, thanks to a blistering rally that saw it notch fresh highs. The cryptocurrency shot up close to $42,000 a couple weeks ago, but has declined since and was last trading at $36,980.

It's still up almost 30% so far this year, and has surged more than 800% from its 2020 low in March. Bitcoin bulls say its rise has been helped by increased institutional buying and the perception that it is an uncorrelated safe-haven asset akin to gold.

On the other hand, skeptics in the traditional financial world — like economist Nouriel Roubini and strategist David Rosenberg — view it as a speculative bubble.

Bitcoin was the original cryptocurrency, created in 2009 as a peer-to-peer payment system that doesn't require a central authority to maintain. Alternative digital coins that were created after bitcoin, like ether and XRP, are known as "altcoins."

Ethereum, the network that underpins ether, is touted by its proponents as potential infrastructure for a decentralized internet. That's because developers can build applications on Ethereum, known as "decentralized apps."

The Ethereum blockchain — a digital ledger of transactions in the cryptocurrency— began a major upgrade late last year called Ethereum 2.0. Ether investors say it will make the network faster and more secure.

"The Ethereum technology has undergone a tremendous amount of development since reaching it's 2017 high," Nicholas Pelecanos, head of trading at crypto firm NEM, told CNBC. "At that time, the new capital investment in the space was largely speculative and for functionalities that were still in development."

"Now, a lot of these functionalities exist and more cutting edge functionalities are to be released, yet the speculative interest in Ethereum is still quite low. This raises the question that now Ethereum is crossing its all time high, what price will it reach in this current bull cycle? I believe that number is a lot higher than the current price."

Detractors have complained of sky-high transaction fees on Ethereum. The average transaction cost for ether skyrocketed to a record high of $16.53 on Jan. 11, according to data from BitInfoCharts, triple the peak average transaction fee in 2018.

By comparison, bitcoin transaction fees are rising but are nowhere near a late 2017 peak. They rose as high as $17.09 on Jan. 12, which is still down 69% from an all-time high of $55.16 on Dec. 22, 2017.

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