Trading volumes on cryptocurrency exchanges have been doing extraordinarily well this week, hitting a new record volume of $68.3 billion, Reuters reported.
The surge shows how strong trading has been lately, according to Reuters.
Bitcoin reached $34,800 on Sunday (Jan. 3), compounding its 2020 rally that catapulted it to quadruple as big U.S. investors got into the mix, Reuters reported. Bitcoin had seen a string of days in which it continually broke records, passing $20,000 on Dec. 16 and other high points for consecutive days after.
The value fell on Monday (Jan. 4) alongside volatility in highly leveraged futures markets before recovering losses.
Ethereum, the second-biggest cryptocurrency, which usually rises at the same time as bitcoin, also hit its highest level on Monday since 2018, with a $1,170 value, Reuters reported.
The perception that seems to have been behind bitcoin’s rally is that the cryptocurrency can be a hedge against inflation risks, as governments and central banks dole out stimulus pay to help fight the economic effects of the pandemic, Reuters reported, as its “potential for fast gains also attracted demand.”
Crypto prices often spike when there are extreme price swings, which Reuters reported shows the central role played by speculative traders in digital currency trading.
A report this month from PYMNTS noted that some of the biggest backers of the recent surge in crypto buyers are institutional investors. PYMNTS reported that this has the potential to make the coins more expensive, keeping them out of the hands of retail investors.
The institutional parties are usually in the possession of ample funding, sometimes billions of dollars, with which to chase profits they want to acquire. And if cryptos become too expensive, they become less and less likely to be seen as anything but speculative instruments.
PYMNTS reported that 90 percent of Americans have never owned bitcoin, and 70 percent have no plan to do so, which could make room for alternatives to the biggest cryptocurrencies.