Why Bitcoin and Ethereum just raced to record highs

A strong gain at the weekend means Bitcoin now has a bigger market cap than Westpac Banking Corp (ASX:WBC) and Australia and New Zealand Banking Group (ASX:ANZ) combined…

a woman

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The Bitcoin price continued to its stellar run over the weekend and raced to an all-time high of US$9,484.91 according to CoinDesk.

At the time of writing the cryptocurrency has dropped back a touch, but still sits almost 16% higher than this time last week at US$9,304.84.

This gives Bitcoin a market capitalisation of over US$155 billion, more than the combined value of both Westpac Banking Corp (ASX: WBC) and Australia and New Zealand Banking Group (ASX: ANZ).

It wasn't just Bitcoin climbing to a new high. Bitcoin rival Ethereum reached a record US$469.94 over the weekend.

What happened?

Traders have been fighting to get hold of cryptocurrencies, and Bitcoin in particular, due to the growing signs of mainstream adoption and the soon-to-be-released futures markets.

According to CNBC, the world's largest futures exchange, CME, plans to list bitcoin futures early next month. The launch of a derivatives product for the digital currency is being seen as another step in establishing bitcoin as a legitimate asset class.

Should you invest?

As I have said previously, I believe Bitcoin could prove to be a good addition to a balanced portfolio due to the diversification it offers thanks to its lack of correlation with any other asset class.

However, I would suggest investors restrict any investment to just a very small allocation due to it being a high risk investment with increasingly wild swings.

Motley Fool contributor James Mickleboro owns shares of Westpac Banking. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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