The market capitalization of the cryptocurrencies has blasted above the $2 trillion mark for the first time in history on Monday. The increase followed a rally by the second largest cryptocurrency – Ethereum. The cryptocurrency market value has more than doubled in less than 3 months.
Meanwhile, Bitcoin stands as the leader of all cryptocurrencies trading at the $59,000 mark on Tuesday. The largest digital token by market cap and price soared 100% in 2021 alone. Well-established financial institutions expect it to reach $400,000. On the other hand, Ether broke a new price record topping the $2,150 mark, with a market cap of $243 million.
Ether and the price of other altcoins were linked to Bitcoin in the past. However, this time Ether seems to be driving the market boosts, after the development of its network Ethereum 2.0 release. In fact, Ethereum is the technology behind the non-fungible tokens (NFTs) which are being sold for millions of dollars later. Ether is up more than 180% year-to-date.
Mark Cuban, billionaire and investor said that he owns a lot of Ether. He added that the digital token is the “closest we have to a true currency.”
Growing interest in cryptocurrency market
Meanwhile, Bitcoin remains on the throne of the crypto market. The digital currency saw an immense increase over the last few months, and a large endorsement by well-established financial institutions. Some names include: Grayscale, Goldman Sachs, Square (NASDAQ: SQ) Ark Investment (NASDAQ: ARKK), and even car manufacturers such as Tesla (NASDAQ: TSLA).
The electric car manufacturer invested $1.5 billion in the digital token and allowed buying Tesla cars with Bitcoin. On the other hand, Morgan Stanley became the first large U.S. bank to offer its wealth management clients Bitcoin.
The interest in cryptocurrencies rose amid the Covid-19 pandemic. Many traders believe that the digital token can be used as a hedge against inflation, and some started adding it to their portfolio instead of gold. However, the high volatility in the cryptocurrency market will continue to block Bitcoin from replacing gold or fiat money.
“The kindling wood for inflation exists,” says Marc Chandler, chief market strategist at Bannockburn Global Forex. “One has to make a judgment about whether there’s sufficient spark.”