Potential of Bitcoin and Currencies Based on Blockchain in 2021
February 17, 2021 (Investorideas.com Newswire)
Brief History of Bitcoin Growth
The first cryptocurrency was created by Satoshi Nakamoto in early 2009. It is a distributed decentralized ledger in which users send funds to each other. It is a peer-to-peer network without intermediaries.
The dynamics of the bitcoin exchange rate against the dollar is extremely positive. The growth of the bitcoin rate is quite impressive. Only 12 years have passed since the founding of this crypto coin. During this time, from 2009 to 2021, the Bitcoin rate increased 5.2 million times from 0.008 USD to 41 616 USD for 1 bitcoin. Since the value of bitcoin is constantly growing, it is considered one of the most profitable investment assets.
Mainstream & Acceptance
The top of the most promising digital currencies for 2021 start with bitcoin. Bitcoin is a trend in the financial sphere of the Internet. Lately, large amounts of money have been invested in this cryptocurrency. Now the capitalization of Bitcoin exceeds $ 583 billion, and this figure is constantly growing. Especially after the coin hit several historic highs and surpassed the 48.000 USD mark.
The latest wave of growth began after Tesla announced the buy of bitcoin for 1.5 billion USD on February 8, 2021. The company noted that soon they will begin to accept cryptocurrency as payment. This led to an increase in bitcoin by 23% per day.
The past year ended on a very good note. While at the beginning of 2020 bitcoin was worth about 7,000 USD, in the end, it was worth almost 30,000 USD. That is, an increase was more than 400%. Thus, many experts expect the potential future value of bitcoin between 36.000 USD and 55.000 USD in 2021.
It is known that BTC's bullish rally can be attributed to the massive influx of institutional investors and hedge funds. For example, MicroStrategy, MassMutual, PayPal, and much more. All these financial giants were actively accumulating digital assets in the fourth quarter of last year. Some of these investors called bitcoin the new gold, and analysts at Guggenheim predicted the potential price of bitcoin of 400.000 USD. Institutional money is expected to continue to flow into the crypto market in 2021.
Bitcoin is a relatively new type of electronic money. Decentralization is the main feature of it. No one in the world can control the bitcoin currency. Although this currency appeared not so long ago, it is quickly gaining momentum and becoming popular. Millions of people keep their money in bitcoins, buy goods for them and pay for various services. It is much more convenient to pay with Bitcoins than with bank cards. You do not need to pay tax, and all transfers in the system are anonymous.
Competition
Central Banks
Central banks of different countries launch their digital currencies. This is a new era in finance, although new privacy and security concerns may arise in the implementation process.
Stable coins are an excellent entry point option for new users who do not want to take risks due to volatility. But at the same time appreciate the high benefits of working with cryptocurrency. Today, the market capitalization of all stable coins exceeds 40 billion USD.
Other Cryptocurrencies
Experts also paid attention to altcoins. In particular, decentralized finance gained attention in the past year much earlier than Bitcoin did. DeFi grew phenomenally. The year started with 680 million USD in assets held in this sector and ended at over 14 billion USD.
DeFi is trying to break the line between traditional finance and cryptocurrency. There is great growth potential in this sector of decentralized exchanges and insurance services.
A significant proportion of DeFi protocols run on the Ethereum blockchain. Thus, the DeFi boom has led to an increase in the use of Ethereum. This has revived investor interest in this currency and network. Also, Ethereum has made significant progress as a protocol. The first phase of ETH 2.0 was launched, which will ultimately lead to improved network scalability.
The potential of blockchain is going far beyond financial services. This is already being observed today. Yes, most ordinary users still associate blockchain with crypto assets, but in fact, this is a very widespread technology. Blockchain is expected to go mainstream in 2021. It will cover a much broader spectrum of the economy such as healthcare, logistics, transportation, and more. Outsource of blockchain development is a modern trend.
Volatility
Bitcoin is often referred to as a volatile currency. Volatility, in simplest terms, is how much the price changes over time, or how it rises or falls. It is a mathematical indicator of the probable price change. Bitcoin volatility is currently at a low level below 5%.
Usually, the smaller the capitalization of an asset, the more it is subject to volatility. This is because small markets are more responsive to changes. It is easier to manage demand through relatively small orders. Bitcoin is still a small asset. So, its price change by 5-10% is perceived more calmly than a change in the value of a currency against the dollar, for example, by 4%.
Thanks to volatility one became a bitcoin millionaire, but another lost everything and got stuck in loans. Digital currency is subject to sharp price fluctuations. Bitcoin had high volatility before 2018 flat. This market situation is great for traders and risky investors. But it makes it difficult to include cryptocurrencies in the portfolios of more cautious players in the market. For example, pension funds will not take a lot of risks and buy an asset with huge volatility.
Conclusion
One of the main events of the upcoming 2021 in the cryptocurrency market will be the dynamics of bitcoin. Most likely, until March there will be a sharp decline in the rate of the main digital currency. Bitcoin may drop to 7-10 thousand USD, but then it will grow again, and by the end of the year, it will be able to exceed the current levels. The potential value of bitcoin is 40-50 thousand USD by the end of 2021.
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