Bitcoin hit $24,658 on Saturday, July 30, its highest level since June 13. Its 27% gain in July made it its best month since October 2021. Another cryptocurrency, Ethereum, has seen a 70% jump over the past month, its best since January 2021.
Bitcoin had fallen below $20,000 in late June and July on worries about rate hikes and inflation, as well as internal cryptocurrency issues like the implosion of the Terra/Luna ecosystem and hedge fund Three Arrows Capital.
However, Bitcoin’s record high of $69,000 in November 2021 is still a long way off. This fragility is not an isolated phenomenon: all digital currencies have followed the same course in recent months. “Cryptocurrencies have correlated with US tech stocks, which are also sharply down, for the past six months,” explains Vincent Boy, market analyst at IG.
A capitalization of $400 billion
In fact, the Nasdaq index is down 20% year-to-date amid rising US interest rates, inflation and recession fears. “The current level is a good entry point into Bitcoin for long-term investors,” says Warren Aoummeur, account manager specializing in crypto asset investments at Coinhouse.
With a capitalization of $400 billion, Bitcoin alone weighs as much as the following twenty major cryptocurrencies. “Bitcoin has the potential to become a global currency standard. This is the only interesting investment in the crypto assets universe for us,” says Jonathan Herscovici, the founder of StackinSat, which offers a programmed Bitcoin investment plan.
Bitcoin is also the least volatile of the “cryptos” as it is based on solid technology that is widely used around the world. “It will be the first to recover because unlike some other assets it has a real economic function. It’s both the best asset to start with and the benchmark for those diversifying across multiple cryptos.” notes Vincent Boy.
Other important assets in this universe, “stablecoins” (literally “stable coins”), are pegged to the price of the dollar or euro. In concrete terms, this means that a tether, a USD coin or a Binance USD is permanently worth between 0.9995 and 1.0005 dollars (around 0.94 euros).
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