Ethereum has had an impressive start to the month, jumping over 31.6% in the last 30 days.
US multinational investment bank and financial services company, Goldman Sachs Group Inc (NYSE: GS) has identified the positioning of Ethereum (ETH), the world’s second largest digital currency, as a viable hedge against inflation. According to a note by Bernhard Rzymelka, managing director of global markets at Goldman Sachs, cryptoactives have traded in line with inflation breakevens since 2019, a trend that has fueled price rises across the market.
Despite the apparent probability in the fact that correlation figures may have little or no impact on the rising price, what is confirmed by the bank is that positive sentiment about the likelihood of crypto-currencies yielding huge gains during inflationary periods such as we are currently experiencing has encouraged the persistent rise in the valuation of digital currencies.
The current growth of the crypto-currency industry, which has reached a market capitalization of $2.65 trillion, is largely fuelled by the economic policies of governments around the world. The advent of the coronavirus pandemic revealed this flaw to a large extent, as central banks embarked on a money-printing spree that quickly flooded economies with an excess of banknotes, and ushered in an inevitable inflationary surge.
Goldman Sachs says Ethereum is a good hedge among its crypto peers
After explaining that crypto-currencies are in the spotlight as worthy assets amid rising inflation, the Goldman Sachs strategist singled out Ethereum as one of the digital currencies most likely to benefit from investors’ reliance on this nascent asset class as a hedge against inflation.
According to the Goldman Sachs strategist, the local context seems favorable for Ethereum, as “it has followed inflation markets very closely, probably reflecting its procyclical nature as a ‘networked’ asset”, adding that “the latest inflation break-even peak suggests upside risk if the dominant relationship of recent episodes holds (gray circles below)”. Pointing to trend charts in Bloomberg Intelligence data.
Ethereum has had an impressive start to the month, having jumped by over 31.6% in the last 30 days. The crypto-currency is currently changing hands at $4,351.48, up 3.5% in the last 24 hours. Despite the surge so far, the Goldman Sachs strategist is calling for a massive $8,000 price top for the open-source smart contract protocol, provided the current correlation persists.
Goldman Sachs reckons that, given the right conditions, this top can be reached within the next two months, a time that Pro-Ethereum’s supporters consider quite remote.
