The start to the new week was spectacular for the cryptocurrency market with major cryptos rallying to new all-time highs. Investors poured money into Bitcoin and Ethereum, the two major cryptocurrencies, using them as a hedge against rising inflation, to the detriment of gold.
As a result, the total crypto market capitalisation increased by approximately $122bn rising from $2.753trn to $2.865trn in 24 hours on Monday.
Bitcoin broke through its resistance level of $64,000 and traded between $65,000 and $66,000 on Monday morning, surging to a record high of $68,000 on Tuesday. It eclipsed a previous record set in late October.
Ether, the native token of the ethereum blockchain surpassed $4,800 for the first time in its history. According to CoinDesk, Ethereum has gained nearly 550% in its per-unit value so far this year.
Inflation as a major consideration for younger investors
Worried by rising inflation, investors are flocking to buy Bitcoin and Ethereum as an alternative to gold, which has been a traditional inflation hedge for an older generation. Younger retail investors, however, appear to favour crypto investment.
Wildred Daye, the head of the trading platform Serurititize Capital told the Guardian:
“Inflation is a major consideration for investors today, and the younger generation of investors often favours cryptocurrency as a hedge over gold. 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.”
A combination of different factors including a resurgence of COVID cases, fuel shortage and rising consumer prices has knocked investor confidence. Alongside the cryptocurrency market, gold prices also surged, consolidating near two-month highs above $1820 on Tuesday.
Many analysts believe that bitcoin and ethereum will continue to rise in the weeks to come.