Bitcoin and Ethereum had huge weekends, with the BTC price exploding to almost $35,000 and ETH soaring to a three year high over $1000. Why? Because “gold is lame” according to Ethereum founder Vitalik Buterin.
The Bitcoin price has gained over 300% through the course of 2020, despite a 50% crash in March brought on by the COVID-19 economic disruption. Institutional investors have been flocking to Bitcoin as a hedge investment against a depreciating dollar driving the BTC price to a new all-time high of $34,778.
Meanwhile, Ethereum has rallied even harder in 2020 with the price gaining over 600% over the last 12 months. ETH, the Ethereum network’s native crypto hit a nearly three-year high of $1,002.81. The Ether price has now fallen back to $952.57, up 24% over the last 24 hours.
Ethereum is the second-highest cryptocurrency by market cap, the total value of ether is currently $110 billion. While the ETH price surge is getting a boost from Bitcoin’s astronomical bull run, the main factor appears to be attributed to the announcement that CME Group is planning on launching ETH futures on February 8 as institutional demand for Ethereum’s cryptocurrency rises.
Gold Is Lame
Throughout 2020, a prevalent narrative among top investors has been that gold will eventually surrender some of its marketcap to Bitcoin. While Bitcoin and Ethereum’s rise are attributed to institutional interest and recognition of BTC hedge value—retail investors particularly the younger generations are now also viewing cryptocurrency as an alternative hedge asset to gold.
“Bitcoin dominance is inevitable after a tumultuous year that has seen the king of crypto surge in price from under US$4,000 in March to a new all-time high of above US$34,000” said Paolo Ardoino, CTO at Bitfinex. “While a growing institutional presence has been part of the narrative of the current bull run, we may see increased retail interest in Bitcoin as a form of digital gold. This could also bolster interest in the many innovative projects coming to fruition within the digital token space.”
In a recent blog post, Ethereum Co-founder Vitalik Buterin gave a very blunt explanation for cryptos rising popularity against gold. He said:
“One of the more underrated bull cases for cryptocurrency that I have always believed is simply the fact that gold is lame, the younger generations realize that it’s lame, and that $9 trillion has to go somewhere.”
A variety of surveys—published before the COVID-19 pandemic disruption forced the world to go digital— have in fact found that younger people are far more inclined to buy Bitcoin, Ethereum and other cryptocurrencies than older demographics.
CNBC Mad Money Analyst Jim Cramer also cited that his new-found appreciation of Bitcoin stems from the asset being something that he thinks his children will understand more so than gold.
Appearing on Morgan Creek Digital co-founder Anthony Pompliano’s podcast on Sept 15, Cramer said that he thinks that his own children won’t feel comfortable inheriting gold but “will feel comfortable with crypto.” Cramer admitted that maybe he was stuck in the past with some of his previous assessments and gold wealth storage leveraging.
Cramer said about upgrading from Gold to Bitcoin:
“I have to start recognizing that maybe I am using a typewriter.”
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