Ethereum Climbs While Bitcoin Steady Despite CIO Doubts

Ethereum rallied more than 15% in the past week, while bitcoin hovered in the mid-$30,000s, as investor sentiment towards cryptoassets remained lukewarm.

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Following the worst month on record in May for bitcoin (BITCOMP), investors in the world’s largest cryptoasset and its peer ethereum (ETH-X) have climbed off lows but are yet to return anywhere near previous highs.

Nonetheless, caution remains the watchword for bitcoin in particular after a sell-off sparked by a crackdown in China on trading, as well as a bout of profit-taking. Whilst it rallied from $34,000 at the start of last week to hit a high above $39,000, bitcoin was unable to hold this level and retreated to trade just below $36,000 this morning. This was despite a flurry of positive news, including talk that El Salvador could adopt it as legal tender (see story below)

Ethereum fared better, surging from below $2,300 last week to trade at $2,728 this morning, albeit slightly off highs seen over the weekend.

Professional investors remain concerned about the near-term outlook. A note from Goldman Sachs (GS) said their meetings with 25 chief investment officers of long-only and hedge funds revealed bitcoin as the least favorite asset for investment.

El Salvador develops law to recognise bitcoin as legal tender

El Salvador could become the first country in the world to make bitcoin legal tender under proposals by its president.

President Nayib Bukele said in a recorded message to the Bitcoin 2021 conference in Miami that the move would "generate jobs and help provide financial inclusion to thousands outside the formal economy". 

He said bitcoin could be "the fastest growing way" to transfer money sent home from abroad. He plans to put the legislation to congress for approval this month.

The US dollar is the current official currency of the Central American nation. About one quarter of El Salvador's citizens live in the US.

Mr Bukele, who has maintained approval ratings above 90% since taking office in 2019, added that a large portion of the $6bn sent home each year by El Salvador nationals living abroad is "lost to intermediaries".

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Disclaimer: This article should not be taken as investment advice, personal recommendation, or an offer of, or solicitation to buy or sell, any financial instruments. This material has been ...

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