By Samuel Indyk & Robert Zach

Investing.com — Two of the largest cryptocurrency markets, Ethereum and Bitcoin, both reached record levels on Tuesday due to global inflation worries and the continued era cheap money continuing to support prices. The Fed’s decision last week to taper asset purchases but signal no imminent rate rises appeared to be the latest catalyst for a move higher.

“The recent surge in the crypto asset partly seems to have been caused by investors piling in, seeing it as a hedge against inflation,” said Hargreaves Lansdown Senior Investment and Markets Analyst Susannah Streeter in an emailed note. “Some appear to have been enticed by the argument that the huge monetary stimulus programs unleashed by the central bank is fueling inflation which will see the value of money decrease over time, whereas Bitcoin has a fixed limit on the number of coins which can be created.”

The maximum amount of Bitcoin ever to exist is 21,000,000 units. However, central banks can print unlimited amounts of money.

Musk’s announcement

A weekend Twitter poll revealed that Tesla CEO Elon Musk plans to sell 10% off his Tesla stock. There is speculation that Musk could reinvest some proceeds in cryptocurrencies if he keeps his word. Musk stated previously that he owns Bitcoin,, and.

Fed warns

Recent Federal Reserve Financial Stability Report has not done much to reduce crypto asset demand. Yesterday, the Federal Reserve released the Financial Stability Report. It sought opinions from numerous contacts regarding financial stability. These included professionals working in investment funds and brokerage firms as well as university professors.

Cryptocurrencies and stable coins were seen as the fifth most cited potential shock to financial stability over the next 12-18 months, after persistent inflation & monetary tightening, vaccine resistant variants, China regulatory & property risks, and US-China tensions.

However, the report itself did little to suggest that the crypto industry could become a major threat to US financial stability, with the report noting that the view into crypto markets is “limited”.

What’s next for Bitcoin?

Mikkel Morch, executive director at cryptocurrency hedge fund ARK36, said $70,000 for Bitcoin “seems imminent”, according to CNBC.

Streeter, however is cautiouser and has issued a warning to investors.

“The US central bank, the Federal Reserve has […] started gently reining in its bond purchase program, and could well tighten more sharply in the months to come, potentially triggering a mini sell off, similar to how the financial markets would react if the drug of cheap money is withdrawn too quickly,” Streeter said. “The perturbations at work in the crypto stratosphere, given the gyrations of coins and tokens over recent months, means investing in Bitcoin is not for the faint hearted or for those with no money to lose.”