Ethereum Prevents Bitcoin From Renewing Record Highs

Over the last week, Bitcoin has been hovering around record highs thanks to high demand from institutional investors and growing global risk appetite. Capital flowing out of the gold market has played a significant role in its rise. However, Ethereum is giving the first cryptocurrency some serious competition.

According to Coingecko, those buying Bitcoin through the issuance of company securities or corporate treasuries, led by Michael Saylor’s Strategy, have increased their reserves by $113 billion since the beginning of the year. Mutual funds are actively purchasing ETFs. Financial institutions that were unprofitable in the recent past are trying to dig out of the hole. Of the 10 mutual funds investing in Bitcoin, 7 exceeded expected profit targets by an average of 22%.

Attempts by the S&P 500 to restore its upward trend, as well as capital outflows from the gold market, added fuel to the Bitcoin rally. Gold fluctuated wildly due to rumours about the Swiss gold bar import tariffs. The US first announced their introduction, then reported that it was fake news. In such conditions, some holders decided to transfer their money to the digital version of precious metals.

Bitcoin’s success could have been more significant. Increased competition from Ether is getting in the way. Companies’ plans to introduce stablecoins are driving demand for open-source blockchain-based cryptocurrencies, like Ethereum. As a result, Ether quotes have risen 190% from April lows. Nine spot ETFs on Ethereum have attracted 6.7 billion dollars, and treasuries have attracted more than 12 billion.

The prospects for Bitcoin will depend on the US stock market’s reaction to US inflation statistics. The deterioration in global risk appetite associated with the broad stock index pullback will cause Bitcoin to retreat.

However, a new generation of investors has emerged in the stock market. They are unfamiliar with both the dot-com crisis and the global financial crisis. They are simply buying up the S&P 500’s failures. As a result, there have been no serious corrections in the broad stock index and Bitcoin since April. Will the fall of Bitcoin be a reason to buy?

The FxPro Analyst Team