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Fundamental Developments in 2021

18 August 2021 | ZebPay Trade-Desk

Crypto has grown many many folds since last year. There have been various additions to the crypto family with new tokens stepping in and leaving a prominent mark like Solana and Polygon, while the other more prominent assets like Bitcoin & Ethereum continue to dazzle the world with their unstoppable growth.

The crypto market value has crossed $2 trillion with the recent uprising of bitcoin and other assets following hot on its tail. The most recent development with crypto is that it is now being widely adopted by global MNCs and even governments as legal tender of money. Many leading firms and manufacturers like Tesla, BMW, Microsoft, Burger King are adopting and accepting cryptocurrency.

El Salvador was the first country to make Bitcoin a legal tender with emerging economies having the highest acceptance rate of these digital currencies make it more attractive. Although it is difficult to say which digital currency (if any) will soar further in 2021, we can safely say that cryptocurrency gains will not disappear anytime soon.

The technology behind many cryptocurrencies, which is the blockchain, has gone far beyond digital technology. In the coin industry, new applications have and will continue to appear. Governments and regulators will continue to determine how best to manage and manage digital tokens, and regulations around these assets are being developed around the world as we speak.

The most dominating asset, Bitcoin has risen by around 275% since last August. Last August the average price of Bitcoin was $11,652 while this year it’s around $39,458. The leap in the price can be attributed to a few things. It started off with Tesla’s adoption of Bitcoin as a payment method, which later took a U-turn.

El Salvador’s decision to make bitcoin a legal tender but was heavily criticised by the World Bank. Another country that moved a step forward in this is Argentina whose president came out in support of Bitcoin and a CBDC but it was rejected by their Central Bank. Paraguay seems to be next in line.

Various Grayscale unlockings also made a strong case for the asset. Microsoft has been leading the software sector in the adoption of bitcoin since 2014. But due to volatility, they have limited it to xbox credit stores for now. They would be also using the ethereum blockchain for preventing piracy. Ethereum prices have swelled by 360% in the last 8 months.

Websites like CheapAir and Shopify let you make purchases and book flights using ethereum and bitcoin too. This year SEC had put a reign in the crypto asset with ropes tightening around the major asset considering them very dangerous.

A lot of countries like Australia are still dismissing Blockchain technology as the wild west yet countries like China and America are trying to put more regulation in place. China has banned the mining of cryptocurrency and using it as a method of transaction stemming the outflow of capital via these currencies. And the USA has been trying to find a way to regulate the flow of digital currency yet with the passing of an infrastructure bill that doesn’t mention digital currency it remains a mystery on how to go about it.

Despite these challenges, over the last year or so a number of new firms have accepted crypto’s, which include the likes of KFC, Burger King, Starbucks, Glamentic, Whole Foods, Overstock etc. 

Over the past few months, high prices and congestion in the network have become a growing concern. That is where Altcoins make a way for new crypto enthusiasts. With more than 5000 altcoins, it’s hard to choose a few. Yet we have some digital currencies which have been making great strides this year.

Polygon’s native token Matic which is used for governance and security of the system has rallied about 7557% since last December. Owing to calling itself the internet of blockchain it has grown a lot in terms of scalability and futuristic goals in just 6 months. It recently acquired Hermez for $250 million and the merger of native tokens is expected. And with Matic wallet integrated into big shot exchanges like Binance, it seems to just gather more heat.

Another altcoin making headlines is the supposed twin of Ethereum, Solana. This has risen by 3677% in just the last 8 months in terms of price. It has been considered as the thing which would replace ethereum since its technology is superior to that of the former asset.

With fundraising done during June, it has become one of the six best venture capitals in the crypto world. It plays host to a range of decentralized products including Serum, a decentralized exchange, which has crossed $4bn in trading volume in under a year of launch. Some other big names include Solible, an NFT marketplace, and Atomic, a non-custodial crypto wallet. Some great things await Solana in the near future. 

In addition, there are two reasons why stablecoins may rise next year: first, the long-term volatility of decentralized tokens; second, the current leader in the stablecoin industry, with Tether weakening with major concerns other’s have entered the industry. 

Ripple’s native currency XRP has been one of the most talked-about and traded cryptocurrencies for a long time. And this year it has escalated by 88% since last December. The SEC’s ongoing fight with the parent company accusing Ripple of selling XRP tokens as unregistered security. This has definitely resulted in some major negative and positive blows to the digital currency in the last few months.

With VISA buying CurrencyCloud which recently partnered with Ripple backed with XRP to search for a new cross-border transactions mechanism.  

Digital AssetMarket Cap Change (%)31/12/2020 (In $B)As on Date (In $B)
Bitcoin (BTC)55.79%539.05839.80
Ethereum (ETH)319.67%84.16353.18
Polygon (Matic)10189.14%0.088.73
Solana (SOL)26039.48%0.0718.39
Ripple (XRP)410.68%9.9850.98

As a whole, the crypto market is doing great. This year has been fulfilling and a year of achievements for a lot of assets. The crypto space as a whole reached a whopping number of $2.06 trillion in market value last Saturday. As shown in the table above Bitcoin’s popularity continues to grow and it still remains the dominant asset in the space with a market capitalization of around $839 bn with an increase of about 55%.

Ethereum held on to its number 2 rank in terms of market capitalization with an increase of about 320% since last year with currently around $353 bn. Polygon’s Matic has shown unbelievable growth in terms of market cap and it has escalated by an enormous 10,189%  with about $8 billion and 17th rank in the list.

Solana seems to be doing wonders with a swelling market capitalization of around 26,039% from last year it has climbed up the ranks now ranked as the top 10 assets. The good old Ripple has gained some major popularity too with the market cap rising by about 410% and continues to be in the list of top 10 rankings at 6th. The heyday of cryptocurrency may come and go, but it is also possible that the cryptocurrency market still offers many advantages. One thing is for sure though, cryptocurrencies are capable of changing the entire financial system, and they will not disappear overnight.

BTC has made an impressive comeback over the past week or so, up almost 45% from its recent lows. The market sentiment towards the asset has turned, and gone are the days where people would say that the asset might test $20,000 levels.

Bitcoin has been trending in an upward direction for 4 weeks straight and is on pace for its second monthly advance. In short, it’s seen its fastest 21-day advance since February, the last time it was in the middle of vaulting toward records, and many believe that this is likely to happen this time around too.

The cryptocurrency is defying criticism over the claims that it is not environmentally friendly, and is advancing even as regulators around the world pose a degree of risk and uncertainty. ETH plays a story no different from BTC. The asset has shown significant traction over the past few weeks and has also seen a boost in volumes.

So far year-to-date, Ether (ETH) has finally outperformed Bitcoin (BTC) in terms of market performance, rising more than 320% against BTC’s 54% returns. ETH has gained more than 60% in the last 30 days, and the bullish sentiment that has set it only seems to get stronger as the asset has been generating benefits from strong volumes and good momentum.

The rapid growth of decentralized finance (DeFi) applications has resulted in strong inflows from institutional investors. In addition to that, the recent London hard fork brought in a new fee burn mechanism which has significantly reduced the daily net issuance. These could be the reasons why the asset has been performing so well off lately.

Despite this rather significant recent rally, some Ether enthusiasts are anticipating the rally to go on and above $5,000, but even the most bullish investors can ascertain that a 90% rally from the current $3,200 levels seems highly unlikely. The recent upgrade has paved the way for Eth2, and the network will soon adopt the proof-of-stake consensus which is likely to make it slightly deflationary in nature. 

References:

https://coinmarketcap.com/

https://www.coindesk.com/

https://www.investopedia.com

Disclaimer : This report is not intended to be relied upon as advice to investors or potential investors and does not take into account the investment objectives, financial situation or needs of any investor. All investors should consider such factors in consultation with a professional advisor of their choosing when deciding if an investment is appropriate. The Company has prepared this report based on information available to it, including information derived from public sources that have not been independently verified. No representation or warranty, express or implied, is provided in relation to the fairness, accuracy, correctness, completeness or reliability of the information, opinions or conclusions expressed herein. This report is preliminary and subject to change; the Company undertakes no obligation to update or revise the reports to reflect events or circumstances that arise after the date made or to reflect the occurrence of unanticipated events. Trading & Investments in cryptocurrencies viz. Bitcoin, Bitcoin Cash, Ethereum etc.are very speculative and are subject to market risks. The analysis by Author is for informational purposes only and should not be treated as investment advice

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