Ethereum has seen an impressive start to a new month after it notably surged by more than 31.6% in the trailing 30 days period.
American 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 from Bernhard Rzymelka, Goldman Sachs’s Global Markets managing director, crypto assets have traded in line with inflation breakevens since 2019, a trend that has fueled the upshot in price across the market.
Despite the probability apparent in the fact that the correlation figures may have a little to no impact on the growing price, what is confirmed by the bank is that the positive sentiment on the likelihood of cryptocurrencies to return enormous gains during periods of inflation as we are currently experiencing has favored the persistent rise in the valuation of digital currencies.
The current growth of the cryptocurrency industry to a $2.65 trillion market cap is in no small measure fueled by the economic policies of governments around the world. The advent of the coronavirus pandemic revealed this loophole to a large extent as central banks went on a money printing race that soon washed the economies with excess fiat notes, and ushered in an unavoidable inflationary upsurge.
Goldman Sachs Says Ethereum Is a Good Hedge Amongst Its Crypto Peers
Having made a case for how cryptocurrencies are in the spotlight as a worthy asset to turn to amidst growing inflation, the Goldman Sachs strategist pointed out Ethereum as one of the digital currencies with the best use case to benefit from investors’ dependence on the nascent asset class as an inflationary hedge.
According to the Goldman Sachs strategist, the local backdrop looks supportive for Ethereum as “it has tracked inflation markets particularly closely, likely reflecting the pro-cyclical nature as ‘network based’ asset,” adding that “the latest spike in inflation breakevens suggests upside risk if the leading relationship of recent episodes was to hold (grey circles below).” Pointing to data trend charts from Bloomberg Intelligence.
Ethereum has seen an impressive start to a new month after it notably surged by more than 31.6% in the trailing 30 days period. The cryptocurrency is currently changing hands at $4,351.48, up 3.5% in the past 24 hours. Despite the upsurge recorded thus far, the Goldman Sachs strategist is calling for a massive price top of $8000 for the smart contract open-sourced protocol, provided the current correlation persists.
Goldman Sachs believes with the right conditions intact, this price top can be attained in the next two months, a timing Pro-Ethereum proponents see to be rather far away.
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