Bitcoin is steadily growing its reputation as an inflation hedge and it boosting the prices of other cryptocurrencies. The second largest cryptocurrency platform in the world, Ethereum, has risen by 6% to $597 on Monday, the highest it has been since mid-2018. And, the value of Ripple’s XRP is also expected to rise significantly, prediction says.
Ethereum is yet to reach its all-time high record of about $1,500 from January 2018, but its price has increased by four times since the pandemic brought global money markets to a sudden stop on March of 2020. Its smaller rival’s, Ripple’s XRP, price has also doubled since the start of November.
The sudden price surge of cryptocurrencies could be explained in large part due to Bitcoin’s massive rally this year. The digital token’s value has increased by 160% on the year and is trading at around $18,632 on Monday, nearly the highest it has been for three years.
While the value of both cryptocurrency assets have gone up massively, their market capitalization still cannot compete to that of Bitcoin. Last week, Bitcoin has reached its all-time highest value at $336 billion last week, while Ethereum currently represents just about $40.6 billion in market cap, and Ripple Stands at about $48.5 billion.
Michael Sonnenshein, the world’s biggest crypto fund Grayscale Investments’ managing director, said in an interview last week that he believes that Bitcoin is the next step in the evolution of money.
As the pandemic continues to force a huge majority of the world’s population to stay indoors, people are spending relatively more time online, and they are probably getting more interests in different cryptocurrencies like Ethereum, said Bernard Meyer, a senior researcher at CyberNews.com.
“But because it’s all so technical, they’re probably investing in these cryptocurrencies without really being certain of what they’re doing – which can lead to a lot of mistakes and money lost,” he said.
In the past, several high-profile hacking and security breaches have caused millions of dollars’ worth of cryptocurrencies, such as Bitcoin and Ripple’s XRP, to be stolen on various platforms. As much as security across these major trading platforms have tightened up, new cryptocurrency buyers, especially of Ethereum, should make sure to familiarize themselves with the smart contract of their tokens.
Investors absolutely have to check the type and terms of their smart contract that they will be using and whether it has been audited and verified, to limit and decrease the chances of something going wrong.