Why is Bitcoin, Ether reaching all-time highs? The crypto rally, explained.
A cryptocurrency rally took two of the biggest digital assets, Ether and Bitcoin, to historic highs on Monday.
the token underlying the
blockchain network, advanced above $ 4,800 on Monday, according to data from CoinDesk. A steady rally of the coin pushed it to a new record in late October, surpassing previous all-time records set in May, with Ether setting its last record on November 3.
Ethereum has grown in importance over the past year, as the network has become a central hub for many decentralized funding projects, as well as non-fungible tokens (NFTs), which have exploded in popularity.
The ascension of the ether goes hand in hand with
the main crypto asset, which topped $ 67,500, according to data from CoinDesk. Bitcoin’s previous record, reached in October as the first exchange-traded fund holding Bitcoin futures contracts began trading, was just below $ 67,000.
Bitcoin’s market cap was close to $ 1.27 trillion on Monday, according to data from CoinMarketCap, with Ether nearing $ 564 billion.
Bitcoin prices have risen over 300% over the past year, while Ether has jumped over 900%.
“The recent surge of [Bitcoin] seems to have been caused by the accumulation of investors, seeing it as a hedge against inflation, ”said Susannah Streeter, analyst at brokerage Hargreaves Lansdown.
“This is a very risky strategy given how volatile the cryptocurrency is, amid other pressures on its valuation such as crackdowns by authorities and even comments on social media,” Streeter added. .
The analyst highlighted fears over whether recent spikes in inflation are transient or more lasting, against the backdrop of central bank stimulus measures that continue to flood markets with liquidity. While the U.S. Federal Reserve announced last week that it would begin to slow, or cut, its $ 120 billion in monthly bond purchases, the quantitative easing program is expected to continue until June.
Write to Jack Denton at [email protected]