December 31, 2020 | ZebPay Trade-Desk
Bitcoin remains a highly intriguing investment. It has soared during the past decade as it emerged as the most-popular and widely accepted cryptocurrency. More retailers are accepting Bitcoin as a form of payment, and several investment firms and exchanges have launched futures trading for Bitcoin, a move that helped legitimize it to a large extent. With Bitcoin’s blockchain infrastructure well established and gaining traction among digital communities around the world, Bitcoin’s value passed the $200 mark in mid-2013, most likely due to its increase in media coverage and the convenience of Coinbase. Bitcoin experienced yet another surge in late-2013, hitting $1,150. Overall, Bitcoin hit tremendous strides in 2013, even surpassing the price of gold in November that year.
Ethereum was later introduced as a new platform based on the blockchain technology that Bitcoin was built on in 2015. Instead of introducing an alternative to fiat currency, Ethereum’s aim is to provide a platform to run decentralized applications and utilize smart contracts with the introduction of ICO’s. Ether is created as its native currency.. A hardfork is introduced to Ethereum in 2016 as a result of the DAO incident, where $50 million is stolen during its ICO due to a security loophole exploit. The purpose of the hardfork was to roll back the platform’s date to reverse the hack. Many feel that the rollback was very much akin to a government bailout which goes against the ideals of crypto community. This results in the creation of Ethereum Classic and the (new) Ethereum.
The year 2017 dawns with more governments and businesses, such as Microsoft and Starbucks, gradually accepting Bitcoin as a legitimate form of payment. ICO’s see a boost in activity resulting in Bitcoin surpassing the $3,000 mark. The news of this price surge eventually attracts major analysts to start following crypto, further bringing it into the spotlight. The final months of the year, it gained mainstream awareness for the first time, Bitcoin’s price went parabolic, crossing $10,000 for the first time. The price of BTC reaches an all-time high (ATH) of $19,783 in December 2017, but quickly falls ~50% in just a few days. The altcoin market meanwhile benefits from the sudden mainstream interest in cryptocurrencies, making record gains that beat even Bitcoin’s unprecedented rise.
This year has seen a significant appreciation in Bitcoin’s price, helped by the steady reconsolidation period after its 2017 highs. Interest in cryptocurrencies picked up again slowly over the second half of 2020, with positive market developments breaking almost weekly. Bitcoin saw it’s new all time high (ATH) this month when it hit $29,244. Many investors are buoyed by the increasing mainstream interest that blockchain technology attracts. The relatively low buy-in has attracted a lot of new investors due to FOMO, on the next major raise in price. Various regulations and the introduction of stablecoins have also allowed investing into crypto to seem a little less volatile.
Cryptocurrency will always be evolving, making transactions quicker and more secure while gaining more mainstream acceptance. Unfortunately, this also gives way for more scams and hackers to find ways to compromise your assets. What almost always follows a major security hack is a drop in overall value. Together with the Ethereum hard fork, Ethereum 2.0 development moving through its phases and and the halving of Bitcoin which took place in 2020, cryptocurrencies will continue to innovate and evolve as regulations and new use cases such as central bank digital currencies help make it increasingly palatable to a mainstream audience.
After the creation of BTC and ETH, both coins have seen cycle analogues to commodity super cycles compressed in shorter duration. After the initial period on sidelines at the start of the decade retail folks jumped into crypto, which is what we saw till 2017 last decade.
After the creation ETH became the most important crypto asset after BTC, consistently showing very high correlation with the BTC, in the cycles we saw last decade the ETH cycle lagged and followed the BTC cycle. Euphoria always infected the BTC first before flowing over to ETH.
Same was the case in Boom before 2017, where BTC first reached prices just below $20,000 and when BTC started going Bust, it was ETH that reached it’s all time high in early 2018, Cycle was similar for both nonetheless, After the highs of 2017, both coins leaked value for the next two years.
2020 has shown a cycle which is on an even smaller time scale, ending the year with a bang, both BTC and it’s alt cousin ETH started the year strong, fell in march of the year touching lows for the year, have zapped up. Coronavirus accelerated the tech adoption by at least a decade and adoption of crypto as asset class improved by leaps and bounds.
Corona crisis led to unprecedented money printing and debasement of fiat, shrunk the returns from fixed income asset classes, leaving the old adage of TINA (there is no alternative) even stronger, leading to institutional and corporate finding solace in return of crypto and limited supply of BTC.
BTC along with challenging the fiat have started eying the territory of grandpa Gold, establishing itself as Zoomer gold, The rollercoaster of the decade has come to end, next decade looks very bright for famous crypto cousins BTC and ETH.