Cryptocurrency trading volume is expected to increase in 2021. Bitcoin and Ethereum are added to the portfolio of investors, banks, and financial giants.
Cryptocurrencies are getting acknowledged across the world as more investors invest in the cryptocurrency market. Investors are interested in cryptocurrencies as they are profitable investments, providing higher returns than the stock markets, though they are volatile, and their price increase is not dependable.
Bitcoin rose more than 4 % on Thursday, and for the week it went up by 45%. It forms two-thirds of the crypto market value. Ethereum, which has 14% of the crypto market value, increased by 45% in value last week.
Bitcoin Rally
Bitcoin (BTC)
Bitcoin (BTC) has increased to more than $37,000, and its market capitalization has accumulated to more than $1 trillion on Thursday. It was a volatile rally that made the crypto hit another record milestone. Its market value was a five-fold climb last year. Institutional investors and speculative traders are the cause of the surge in the cryptocurrency.
In March, the Bitcoin reached a low of $4,000 but quickly recovered to zoom upwards, to more than $30,000. In the first week of January 2021, it touched $34,800, a day to remember, as it was the 12 anniversary of the Bitcoin. By the end of 2021, experts forecast a surge to $100,000, while it is expected to touch $300,000, by the end of 2022. Bitcoin has surged 363% in over 12 months and is expected to rebound in the same manner in 2021.
It was the first cryptocurrency to arrive in the market. It provides secure transactions and low transfer fees between countries.
Ethereum
Ethereum is the next popular crypto coin that has a strong market capital. It surged to more than $1,000 on Sunday, 3 January 2021, its highest levels since February 2018. It broke $800 in May 2018 and in November 2020. The volume traded in the eight exchanges increased substantially in the last month of 2020. Ethereum is expected to rise even further to $1,200 shortly in the New Year. It is within reach of its all-time high of $1,400, reached in January 2018. 2.0 is the upgraded version of Ethereum, which makes it more secure and faster.
It supports smart contracts and helps in a decentralized mobile application. The total value of Ethereum is now at $114 billion. The Bull Run seen in Bitcoin has propelled the price of Ethereum too.
Litecoin
Litecoin is the eighth-largest cryptocurrency that takes just 2 minutes to mine a block, as it is very fast. It processes transactions faster than Bitcoin. On 4 January 2020, Litecoin increased by more than 10%, moving to $155. It is now above its resistance at $166.00.
Ripple's XRP
Ripple's XRP has its own digital payment platform. It came under scrutiny by the US Securities and Exchange Commission in December 2020, after which its value fell drastically. But on Monday, 4 January 2021, it was trading at 23 cents. Currently, it is above its resistance at $0.2790. It provides a very low exchange rate and transfers currency within minutes.
Experts warn that the third-biggest cryptocurrency may become worthless in market value after the $1.3 billion fine imposed by the US SEC on the XRP. It rallied to $0.55, the day before the lawsuit was charged.
Reasons for the Cryptocurrency to Rally in 2021
Altcoins gain strength whenever the value of Bitcoin climbs up. Investor interest zooms in the cryptocurrency when its value spurts higher fast.
The US Dollar has moved to below $90, with the pandemic disrupting the US economy. It is causing an alarming move of funds from the greenback to the cryptocurrencies.
Experts say that the cryptocurrency movement is due to the inflationary money-printing measures taken by countries to improve liquidity. Various stimulus programs from central banks are introduced to protect consumers from the pandemic and its downturn. Interest rates are at their lowest levels across countries, while quantitative easing is on the increase, to handle the financial crisis.
PayPal plays an important role to promote cryptocurrency usage. It has allowed its customers to use cryptocurrency for buying and selling.
Bitcoin, considered to become a means of payment in the near future, is gaining importance. Businesses accepting bitcoin as payment is on the increase and expected to go higher in 2021. Though cryptocurrency has lost more than 80% of its value many times over the decade, it is still gaining popularity from Generation X-ers and baby boomers.
More than 500 new cryptocurrencies have emerged in the market. However, the most widely circulated ones are Bitcoin, Ethereum, Litecoin, XRP, and BAT.
A Critical View
The Financial Conduct Authority (FCA) had banned the sale of derivatives and ETN's in October. It went into effect on Wednesday in the United Kingdom. Criticism flows from the crypto sector about the new regulation from the UK financial regulator. They say that the unregulated platforms that offer less protection, such as Deribit and BitMEX may attract more crypto users.
Many crypto brokers like Voyager have suspended trading in XRP after the US SEC's lawsuit filed against it.
However, critics have been warning investors about the cryptocurrency, stating that it has no intrinsic value.