Digital currencies Ethereum and XRP soared on Monday, gaining momentum as bitcoin powered on toward its all-time high.
Ethereum, the second largest cryptocurrency by market capitalization after bitcoin, jumped 7 per cent to its highest since June, 2018, taking its gains to more than 25 per cent over the past three days alone.
Traders said Ethereum, which often moves in tandem with bitcoin, has been boosted by growing demand ahead of an upgrade to its blockchain network – due in early December – that is widely expected to make it quicker and more secure.
The upgrade could mean “more people and businesses can use Ethereum for economic activity, rather than just financial trading,” said Ross Middleton, co-founder of cryptocurrency exchange DeversiFi.
Ethereum, like bitcoin, is mostly popular among speculative traders. It has gained little mainstream use.
Third-biggest coin XRP soared 22 per cent to its highest in more than two years. It has gained around 75 per cent in the past three days, although two traders said there was no immediate news catalyst for its jump.
The price of these “altcoins” is closely tied to bitcoin. Less liquid than their bigger cousin, they tend to suffer from even greater volatility than the original cryptocurrency.
Smaller coins have rallied as cryptoinvestors took gains from bitcoin’s stunning recent rally, which has seen it rise around 10 per cent in the past week.
Bitcoin was last up 1 per cent at US$18,603, its all-time high of US$19,666 hit in December, 2017, in sight. It has soared around 160 per cent this year.
“Bitcoin skyrocketed, profits were taken, profits went back into altcoins,” said Joseph Edwards, head of research at crypto brokerage Enigma Securities.
Bitcoin’s gains have been fuelled by a demand for risk-on assets amid unprecedented stimulus measures to combat the damage from the COVID-19 pandemic.
With governments and central banks in full stimulus mode, investors have also sought out bitcoin for its perceived resistance to inflation.
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