Bitcoin back above $50,000 as cryptocurrencies rally
By Neil Dennis
11:49, 2 September 2021
Bitcoin passed back through the $50,000 level on Thursday, as all of the major cryptocurrencies rallied strongly - including Cardano, which traded above $3 for the first time.
The number-one cryptocurrency by market capitalisation climbed 5.3% to $50,035 in midday trade in London, while Cardano - the number-three digital asset by market cap - jumped 8.6% to $3.054, having earlier hit a new record high of $3.099. Ether, the second-biggest cryptocurrency, was up 6.1% at $3,759.
Caution ahead of US payrolls
Investors were generally trading cautiously on Thursday ahead of Friday's non-farm payrolls report - the monthly examination of the US labour market.
If a similar sized increase is seen in the number of jobs created in August that was seen in July - around 900,000 - talk of tighter US monetary policy will be back on the agenda. Particularly with inflation running at an annual rate of 5.4%.
Indeed, cryptocurrencies - particularly bitcoin - have been seen as something of a hedge against inflation in recent months, as consumer prices have risen.
Anatoly Crachilov, co-founder and chief executive of Nickel Digital, said: "Our research shows professional investors are very concerned about the growing threat of inflation, and many fear authorities have underestimated the scale of this problem.
"Bitcoin is increasingly attracting investors’ attention as a long-term hedge against inflation.”
Unlike the dollar, euro or any such national currency, bitcoin has no supporting central bank to increase the supply of money when circumstances might warrant it.
"Bitcoin supply is capped in an immutable manner, which can’t be increased and this unique independent monetary policy, full transparency of circulating supply, and credible neutrality are the drivers behind unfolding institutional adoption of crypto assets," added Crachilov.
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Doubts remain
However, it remains to be seen whether cyptoassets will endure as an inflation hedge. The Federal Reserve, European Central Bank and Bank of England all expect price pressures to remain heated for some months to come. Market volatility has been known to knock cryptoasset prices down by tens of percentage points within hours.
Speaking a few days ago to Bloomberg Wealth, billionaire investor John Paulson, president of investment firm Paulson & Co, said he thought cryptocurrencies would eventually prove to be worthless.
He said: "Once the exuberance wears off, or liquidity dries up, they will go to zero. I wouldn’t recommend anyone invest in cryptocurrencies."
Read more: PBOC says Bitcoin has no value as it warns of crackdown
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