It came amid an ongoing cryptocurrency rally that analysts have attributed to hedging risks from rising inflation, with predictions it will rise further in coming weeks.Photo: Chesnot/Getty Images Bitcoin ( BTC-USD ) hit new records of $68,000 (£50,000) per coin for the first time ever on Tuesday, while ethereum ( ETH-USD ) also pushed to all-time highs of $4,840.
It came amid an ongoing cryptocurrency rally that analysts have attributed to hedging risks from rising inflation, with predictions it will rise further in coming weeks.
This beats the previous record high set last month, when bitcoin reached nearly $67,700.The world’s largest crypto is up more than 130% this year alone, while ethereum has gained some 550%.Just five years ago, a single bitcoin was worth about $700.
According to CoinGecko, the total value of digital tokens has now reached $3.1tn.
Bitcoin high record highs on Tuesday, heading towards $70,000.Chart: Yahoo Finance “Inflation is a major consideration for investors today, and the younger generation of investors often favour cryptocurrency as a hedge over gold,” Wilfred Daye, the head of the trading platform Securitize Capital, said.
“In fact, while gold has slid throughout the year, bitcoin and ethereum have more than doubled.Retail investors have played a major role in fuelling this shift and institutional investors are increasingly following suit.”
Meanwhile, Naeem Aslam of Avatrade said that increased institutional take-up of cryptocurrencies is also driving bitcoin and ether higher.
“The recent cryptocurrency rally has been aided by the launch of a bitcoin-linked ETF in the United States as well as Elon Musk’s weekend Twitter poll.
“Solana and binance coin have gained nearly 20% in the last week, bringing the total market capitalization of cryptocurrencies to $3 trillion.
He added: “As evidenced by bitcoin’s price action, which is now four times what it was at the end of 2020, investors are becoming more comfortable with the practical use of bitcoin and companies are working hard to find innovative ways to use blockchain technology, as seen by the launch of new coins such as Solana.”
Watch: What are the risks of investing in cryptocurrency?
Last night, the US Federal Reserve raised concerns over the rise of stablecoins; cryptocurrencies that try to peg their market value to some external reference, such as the US dollar.
Story continues In its financial stability report, it said that some stablecoins were vulnerable and that policymakers are concerned about the consequences if a stablecoin can’t hold its value.
“The value of stablecoins outstanding has grown about fivefold over the past 12 months and stood at around $130bn as of October 2021,” the report said.
“Certain stablecoins, including the largest ones, promise to be redeemable at any time at a stable value in US dollars but are, in part, backed by assets that may lose value or become illiquid.If the assets backing a stablecoin fall in value, the issuer may not be able to meet redemptions at the promised stable value.”
On Wednesday, traders will be looking towards inflation data in the US where economists predict a figure for October above 5%.
Watch: What is inflation and why is it important?.
