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Ethereum hits new high and bitcoin nears record on inflation fears

 (Getty Images)
(Getty Images)

Bitcoin neared a record high and ethereum reached a fresh all-time peak on Monday amid continued fears about inflation.

Ethereum, the world’s second biggest crypto token, was up 2.8% to $4,739 by 12.50pm in London. It had been as high as $4,761 earlier in the day.

Bitcoin was 6.3% higher at $65,949. The all-time high for the cryptocurrency is $66,930.

Tokens were advancing on Monday amid continued fears about inflation around the world. The Bank of England warned last week that inflation was set to peak at 5% early next year and the market expects official data due in the US on Wednesday to show inflation running at 5.3% in October.

Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown, said the recent rise for cryptocurrencies was “fuelled by expectations that the era of cheap money looks set to hang around for longer, while inflation is expected to keep ticking up.”

Bitcoin has an inbuilt limit to the number of coins that can ever be in circulation, which leads some investors to view it as a hedge against inflation. Soaring prices this year and continued loose monetary policy have led investors to pile in to bitcoin this year, making it the best performing asset so far this year. Bitcoin is up 111% since the start of the year, Bank of America said on Friday, outpacing the 71% gain for oil.

“The recent surge in the crypto asset partly seems to have been caused by investors piling in, seeing it as a hedge against inflation,” Streeter said. “Some appear to have been enticed by the argument that the huge monetary stimulus programmes unleashed by central bank is fuelling inflation which will see the value of money decrease over time, whereas Bitcoin has a fixed limit on the number of coins which can be created.”

The surge in bitcoin and ethereum supported prices in the wider sector. The global value of cryptocurrencies is up 3.9% to $2.86tn over the last 24 hours, according to data provider CoinMarketCap.com.

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