Bitcoin slips slightly as crypto rally shifts to ether

Bitcoin held near a record high on Monday a day after breaching $34,000 for the first time, while ether, another digital currency, also surged as the crypto rally continues.

Ether climbed as much as 22% to about $1,163 after a 30% advance on Sunday. Bitcoin held on to most of its weekend gains, dipping about 1.6% to $33,060 by 6.53am on Monday in London, according to a composite of prices compiled by Bloomberg.

“What we’re seeing is the standard moving of the crypto markets from bitcoin to the alt-coin market led by ether,” said Vijay Ayyar, head of business development with crypto exchange Luno in Singapore. “This rotation happens usually when bitcoin has a large rally and investors rotate profits” into other digital coins, he said.

Bitcoin eclipsed its 2017 high late in 2020 and hit $20,000 for the first time in the middle of December. Proponents of the world’s largest cryptocurrency argue that it’s muscling in on gold as a hedge against US dollar weakness and inflation risk, citing evidence of growing interest among institutional investors.

Sceptics view the digital asset’s more than 300% surge over the past year as a risky bubble fuelled by investors chasing the momentum in crypto prices.

“The drivers of the crypto rally, if anything, are strengthening amid still low interest rates, political uncertainty” and the prospect of more government stimulus, Julian Emanuel, chief equity and derivatives strategist at BTIG, said in an e-mail. But volatility can work both to the upside “as well as to the downside”, he added.

Bloomberg