Bitcoin and Ethereum Have Hit All-Time Highs Thanks to These Factors
Bitcoin and Ethereum are rising in value at a rate not seen before.
Amid a broad rally in financial assets, Bitcoin and Ethereum have both reached all-time highs. Analysts believe that the key reason for these new highs is the search for a hedge against inflation. Bitcoin jumped 3.6 per cent to reach US$ 68,513 while Ethereum rose to about US$ 4,840. The total value of digital tokens has reached about 3.1 trillion.
Bitcoin and Ethereum
As the pandemic recovery has led to inflation, people are looking for assets like Bitcoin and Ethereum that can deliver results, even if the risk is high. The US equity markets have been hitting new highs almost daily in the last few weeks, and Bitcoin is up by over 130% this year. Similarly, Ethereum is up by 550%.
The Head of Research at Pepperstone Financial Pty, Chris Weston, believes that inflation hedges are in demand and crypto is leading. He added that crypto is where fast money is.
Record-low real yields might also increase the appetite for riskier investments like Bitcoin. It can also push a few markets to dangerous levels. A report by The Federal Reserve highlighted that asset prices are vulnerable if sentiment rises. It also highlighted dangers from stablecoins. They are a type of token that might have a steady value.
Bitcoin last got new highs in October after the first Bitcoin-linked exchange-traded fund was launched for US investors. It made people believe that virtual coins are winning more mainstream acceptance, even from institutional investors.
The ride has been volatile as the token was below US$ 30,000 in June after its energy consumption was criticized and there was a cryptocurrency crackdown in China. When the crypto sector adjusted to China’s broadsides, there was some recovery.
Fundstrat talked about the Bitcoin rise in a report and stated, “This breakout in Bitcoin might signal the start of a final push-up for the fourth quarter before the crypto market shows more pronounced consolidation into next year. Strength in Bitcoin, Ethereum, and many other altcoins looks likely in the weeks to come.”
Another theory for this rally is the influence of Elon Musk. In a Twitter poll he started, his followers voted in favour of him selling 10% of his stake in electric-carmaker Tesla Inc.
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