What has been expected from bitcoin for three whole years has come true. It not only renewed the all-time high, not only broke through the $20,000 level, but also soared in a short period from December 12 to 17 from $18,000 to $23,620, adding more than 30%.
If we compare the rallies in December 2017 and December 2020, the main difference between them, according to many experts, is that in the first case, the main driving force was retail investors, but now it is institutional. According to the analytical company Chainalysis, the "population" of bitcoin whales (1000 BTC and more) has been expanded with 302 new wallets since the beginning of the year and peaked at 2274 at the end of last month, and balances at the corresponding addresses increased by 1.4 million BTC during this time.
To be fair, it should be noted that the number of retail users is also growing. The number of bitcoin addresses with a non-zero balance has approached the mark of 33 million, updating the historical maximum, according to the data of the analytical service Glassnode. The number of wallets with a balance of more than 1 BTC is also steadily growing. The indicator has set a new record at 827,105 recently, recovering from a slight recession at the end of September.
Of course, we have written about this many times, the coronavirus pandemic contributed to the popularization of bitcoin. However, it is probably early to talk about the mass acceptance of cryptocurrencies by the population. So, in a survey conducted by Opinium and AltFi among UK residents, only 10% said they bought a cryptocurrency. And although the results of 2020 can be viewed as an undoubted improvement - a year ago the figure was half as much, 5.3% - it is still a very small percentage, which leaves significant potential for growth in the crypto market, the total capitalization of which reached $670 billion on December 17.
It should be noted that despite the fact that BTC/USD quotes have already by far exceeded the high of 2017, the capitalization has not reached its record value of $830 billion, recorded on 07 January 2018. That is, the rise in the value of bitcoin is fueled by significantly smaller amounts of fiat than before, which may indicate the pair is strongly overbought. This is evidenced by the values of the Crypto Fear & Greed Index, which rose again in seven days from 89 to 95 and is very close to the maximum value of 100 points. But while waiting for a correction, one should take into account that the end of the year is now, the Christmas holidays are coming, and the most unexpected things can happen on the thin market - from zero volatility to new spikes to the north.
So, is it worth waiting for a repeat of the "crypto winter" of late 2017 - 2018? Or, after a slight correction, the BTC/USD pair will again rush to new heights?
Bestselling author of Rich Dad Poor Dad and entrepreneur Robert Kiyosaki is convinced that cryptocurrency will continue to rise to $50,000 next year amid further influx of institutional money. The entrepreneur, having said that “America is in trouble”, precludes the “death” of the US dollar and a “bright future” for gold, silver, bitcoin.
The well-known Dutch cryptanalyst PlanB, who developed the popular BTC stock-to-flow valuation model, believes that the price of the reference cryptocurrency may rise to $100,000 by the end of 2021, and maybe up to $300,000. PlanB admits that his outlook sounds extremely optimistic and even somewhat amusing for some investors. However, the rise in the price of bitcoin in the past allows him to make such predictions.
According to analysts from the financial conglomerate JPMorgan Chase, institutional investors can invest up to $600 billion in the first cryptocurrency in the coming years. This requires that American, European and Japanese insurance companies and pension funds invest only 1% of their assets in bitcoin.
As JPMorgan lead strategist Nikolaos Panigirtzoglou noted, the recent $100 million investment by Massachusetts Mutual Life Insurance Company marks another milestone in the adoption of the first cryptocurrency by such organizations. At the same time, the analyst admits that it is quite difficult for such traditional investors to invest in cryptocurrency, since there are still regulatory requirements for the choice of investment assets in terms of risks and fulfillment of obligations. This can limit the amount of funds available for buying BTC.
In general, the topic of the attitude of government regulators to cryptocurrencies is one of the key factors for the development of this market. This issue has been actively discussed at the recent BlockShow conference. The speakers said that although decentralized finance needs to communicate with regulators, it cannot be full concessions to them. If we introduce complete regulation of the market, then it will hardly differ from fiat.
Now about the prospects of the BTC/USD pair for the next few weeks. According to the average forecast, the probability of its rise to $25,000-26,000 is estimated at 30%, above $30,000 - 10%. As for the fall, the probability that the pair will decrease to the $18.500-20,000 zone is 20%.
As for altcoins, those who at this stage are wary of investing in bitcoin may pay attention to ethereum. If BTC has already exceeded its 2017 high by 16%, then ETH is still to grow from its current values in the region of $670 to its all-time high of $1,420. And this despite the fact that this main altcoin showed better dynamics than bitcoin this year: it has added 640% from the March low against 465% for BTC.
In addition, altcoin blockchain No.1 has recently been updated. Ethereum 2.0 has made the cryptocurrency safer, more efficient, scalable and, hopefully, potentially more profitable.
And here it is necessary to recall the recent warning of the co-founder of ethereum Vitalik Buterin, who urged not to get into debt or take out loans to buy any digital assets, be it bitcoin, ethereum or any other coins. He said he had “only a few thousand dollars of net equity” before Ethereum was created. “However, I sold half of my bitcoins to be sure I would not break up if the rate fell to zero,” he writes.
Here you can find some general answers to the most common questions about cryptocurrencies. https://nordfx.com/promo/bsc.html?id=972795