What’s Happening in Crypto Right Now
In 2009, the elusive Satoshi Nakamoto, a pseudonym used by one or more people to maintain their anonymity, published an article describing how to create the equivalent of cash in digital form and released the software that created bitcoin, the first cryptocurrency. Since then, cryptocurrencies have increased, and their market value has skyrocketed. In this article, we will look in detail at the overall situation in the crypto market at the moment. What it looks like, and what to expect in the future.
It is necessary to understand what cryptocurrencies are to evaluate the evolution of their market. A cryptocurrency is a form of digital money combined with a payment system. As digital money, cryptocurrencies do not provide any innovative element: the digitized version of money has been a part of our lives for many years. We use it regularly through electronic bank accounts and debit and credit cards. On the other hand, cryptocurrencies as a payment system do constitute an innovation. For the first time, we can exchange money digitally, relatively secure and anonymously, directly between buyer and seller without the transaction having to be processed centrally by an intermediary such as, for example, a bank.
Rapid record run on the crypto market to date.
Cryptocurrencies are in the midst of an unprecedented rally. While skeptics see a huge bubble in Bitcoin & Co., several factors speak in favor of cryptocurrencies.
It’s a breathtaking record drive that the crypto market has been on since the beginning of the year. By far the heaviest cryptocurrency in terms of market capitalization, Bitcoin has gained over 900% in value since the Corona market slump in March 2020 until mid-February and most recently climbed above the $60,000 mark. Digital currencies are increasingly gaining public interest and sometimes provoking heated discussions. For die-hard advocates, Bitcoin & Co. are the means of payment and storage of future value, while the underlying technology is the infrastructure of tomorrow’s economy. On the other hand, Skeptics want to recognize a bubble in the crypto market that will expand surprisingly but ultimately has to burst with a louder bang, which will bring heavy losses, especially for inexperienced private investors who let themselves be infected by the hype.
Price drivers are intact.
Despite all the skepticism: The macro-environment for cryptocurrencies currently appears to be quite favorable. All the factors that have favored price gains for cryptocurrencies in recent months are still intact.
A significant acceleration in inflation can be expected in the current year – the concern about such a situation had recently given the central bank-independent cryptocurrencies a boost due to the expansionary monetary policy and the massive expansion of national debt in response to the corona crisis. In addition to the fear of increasing fragility in the financial system, the high level of political uncertainty around the world due to the corona crisis speaks in favor of cryptocurrencies. Following events that trigger fear, the Bitcoin price has risen sharply in the past. The growing commitment of institutional investors seems to be a factor that significantly favors price increases in cryptocurrencies.
In fact, the list of major asset managers, banks, and companies that invest in crypto forex has grown significantly in the past few months. In the current year, a message from Tesla fueled the course of the largest cryptocurrency: The electric car maker had disclosed that it had invested $1.5 billion in Bitcoin. In addition, the multibillionaire Elon Musk-led group wants to accept payments in Bitcoin in the future. Reports have also recently made the rounds that a unit of the investment bank Morgan Stanley is planning a large-volume investment in cryptocurrencies. And while asset managers such as Fidelity International have been dealing with cryptocurrencies for years, the opening of large payment service providers to cryptocurrencies was an important signal for entry from other providers in the asset management industry. Last year, PayPal got the rally off the ground by announcing that it wanted to enable customers to trade digital currencies, and Mastercard followed suit in 2021. The opening of large payment service providers to cryptocurrencies was an important signal for entry from the point of view of other providers in the asset management sector. Last year, PayPal got the rally off the ground by announcing that it wanted to enable customers to trade digital currencies, and Mastercard followed suit in 2021. The opening of large payment service providers to cryptocurrencies was an important signal for entry from the point of view of other providers in the asset management sector. Last year, PayPal got the rally off the ground by announcing that it wanted to enable customers to trade digital currencies, and Mastercard followed suit in 2021.
Bank activity fueled
In addition, at the beginning of January, the US regulator OCC allowed banks to store cryptocurrencies and pass so-called stable coins – cryptocurrency linked to underlying assets such as the dollar – as a means of payment. This fuels the activity. With Bank of New York Mellon, the world’s largest securities custodian wants to complete digital assets and cryptocurrency infrastructure by the end of the year. In Europe, Deutsche Bank is preparing to set up a platform for custody of digital assets for institutional customers.
The increased institutional presence gives hope for more stable price developments. However, the high volatility that has characterized the market so far is likely to remain for the time being. The market is far from mature, but still very illiquid and occupied by few players. These can cause severe price distortions through large individual transactions. It would probably take years for the market to be sufficiently deep to dampen the fluctuation range.
Price setbacks, which would be seen as a slump in other asset classes, are often seen as a healthy cooling-off in cryptocurrencies. Strong corrections are still expected because of the high volatility, although the upward trend will remain intact. In particular, other candidates such as Ethereum still have considerable catching-up potential here compared to Bitcoin.
While Bitcoin could still attack the $60,000 mark in the current year, the next milestone for Ethereum is $3,000 after crossing the $ 2,000 limit.
What the market looks like?
Cryptocurrency markets are decentralized, which means they are not issued or backed by a central authority such as a government. Instead, they run across a network of computers. However, cryptocurrencies can be bought and sold via exchanges and stored in wallets.
It is a market for risky investors, with an important trading strategy, which begins with technical and fundamental analysis. The technical analysis is the one that provides the evaluation of the data taking into account the historical yields of the cryptocurrencies and their price changes to make a future projection of their value in the market.
Cryptocurrencies, A Market In Constant Evolution
The cryptocurrency market is in constant evolution. Beyond the fame of Bitcoin, and Ethereum, there are other cryptocurrencies such as Litecoin, Ripple, Namecoin. Its speed and the second characterize the first by being a tool to be able to convert one currency into another without the commissions of the exchange houses. While Namecoin has the purpose of being able to register web domains with the ending .bit.
What differentiates the different cryptocurrencies when it comes to investing is the philosophy of their existence and the technology they use.