Two largest cryptocurrencies by market capitalization, Bitcoin (BTC 3.09% ). When Ethereum (ETH 3.04% ).It was also dominant in trading late Wednesday afternoon. As of 4:30 pm, both have risen by more than 4% in the last 24 hours.
There were two big engines that raised the price of Bitcoin and Ethereum. The first was the resurrected stock market. While many see cryptocurrencies as a defensive investment against a stock market downturn, in fact, the price of digital coins is often closely correlated with market volatility. As tokens, both Bitcoin and Ethereum can (and often work) work well in the bull market.
Driver 2 was inflation, a macroeconomic concern that everyone currently has. Yesterday, I learned that the US consumer price index (an important and carefully monitored inflation gauge) rose 8.5% year-on-year in March.
This was the highest rate in more than 40 years, following a similarly worrisome surge of 7.9% in February. March numbers are rattling investors looking for some, Any Improving the situation.
Inflation affects cryptocurrencies because they are considered a hedge against cryptocurrencies, whether right or wrong. Therefore, as an alternative currency to the US dollar, it should work as well as the value of the greenback declines. This idea clearly worked on Wednesday, as the prices of so many altcoins other than Ethereum rose.
Personally, I’m a Bitcoin and Ethereum holder, but I think only the latter deserves the current rise. This is because Bitcoin is not yet practical enough. At least, Ethereum is the home currency of what remains to be the top smart contract blockchain on the scene.
Still, I believe both need to hold their current values more or less, at least as long as inflation is a major concern.
This article represents the opinion of a writer who may disagree with the “official” recommendation position of the Motley Fool Premium Advisory Service. We are miscellaneous! Asking investment papers, even our own, helps us all think critically about investment and make decisions that help us to be smarter, happier, and richer. increase.