Crypto Round Up

Cryptocurrency reached some record-breaking feats last year, and it looks like this recent bullish trend is set to continue in 2021. The digital currency has seemed to gained ever-increasing popularity due to several unprecedented factors. Read on to discover what these developments in cryptocurrency entail and what the future holds for digital currencies. 

Recent Developments in Crypto

There has been continued high volatility in the crypto market, with Bitcoin in particular rallying from the value of $4,000 to more than $40,000, and then back to $30,000 – all in one year. During a market crisis, cryptocurrencies are thought to be the first to be dropped by investors, like at the beginning of the pandemic in March 2020. However, with more people staying at home, there has been an increase in interest from casual investors in financial trading, and cryptocurrency was actually one of the best performing assets of 2020. These unknown and uncertain influences on the crypto market add to its already volatile environment. 

Lennart F. Clausen, Head of Trading at Skilling, compares the current popularity of cryptocurrency to that of the previous ‘dotcom bubble’: 

“There are obvious similarities, and maybe one of the most obvious is the “FOMO” (fear of missing out). But also, in particular amongst the institutional investors, I believe that they have realised over the last 12-24 months that the crypto-market and blockchain technology is here to stay, and that they need to be invested.”

Social media trends and forums have also played a part in cryptocurrency’s recent developments. Bitcoin (BTC) and other altcoins have seen a rise in investments and therefore prices, after other markets and stocks have been restricted due to the Robinhood and GameStop incident in January 2021. There has been a rally for the digital currency, counteracting its downward trend and fall to under $30,000. The volatility of the shares in companies such as GameStop and AMC Entertainment, as a result of a somewhat battle between retail investors formed via a Reddit forum and Wall Street hedge funds, meant that cryptocurrencies including Ethereum and Litecoin have risen by between 5% and 10%.

The altcoin, Dogecoin, has also recently received some traction after some social media attention, and a viral video on the platform TikTok about the cryptocurrency received 1 million views. It may be some short-lived attention for the 17^th value-ranked cryptocurrency, but this trending effect on the market from social media platforms and chatrooms, has caused blockchain assets to advance. As a decentralised market, it has become more attractive to casual investors who wish to develop a portfolio outside of the Wall Street and other traditional financial systems, and has come to appear as more of a level playing field for traders. 

Best Performers Recently 

Of course, Bitcoin (BTC) has denominated the market recently, as it has since January 2009. With its prices surging to over $40,000 in January 2021, it accounted for more than 69% of the cryptocurrency market. 

As BTC became more popular, some of its transactions became slower and transaction fees increased, as the data blocks filled up. Some BTC developers therefore diverged and created Bitcoin Cash (BCH) in August 2017; their own version of BTC. With more data within its blocks, it has piqued interest recently, and has huge potential for growth.    

Litecoin (LTC) has also gained popularity recently, not only due to the events of other markets, but also because of its simplicity. Developed in 2011, it is described as playing the role of silver to Bitcoin’s gold, by its creator Charlie Lee. LTC has much lower system requirements than BTC, and can be mined on an ordinary computer. It therefore has faster and easier transactions, making it one of the best performing cryptos in 2021, so far. 

Looking Towards the Future 

According to the Bank of Singapore’s chief economist, Mansoor Mohi-uddin, investors in the future, may replace the traditionally safe assets in their portfolio, like gold, with cryptocurrencies. However, this is based on the idea that there will be more development of trustworthy platforms, that will hold the digital currency securely. Furthermore, more interest in cryptocurrency will come as a result of improved liquidity, which will consequently reduce the level of volatility in the market. It is reported that despite its increased interest, BTC and other digital currencies, are very unlikely to replace the likes of the US dollar, and traditional fiat currencies, anytime soon. 

You can learn more about bitcoin and how to invest in it at Bitcoin Profit