Bitcoin and Ethereum: Trading volumes and demand are off the scale
Bitcoin and Ethereum have opened the new year in style, making record-breaking strides. Two leading crypto assets are putting cryptocurrency in the spotlight, demonstrating the huge potential in this sector.
New records of the King of crypto space
New data from Santiment shows that BTC has almost reached the price of $ 35,000, and Ethereum has soared above the $ 1,000 mark. The network data provider noted:
“Since history began to be written when the BTC reached $34.8 thousand. And seemingly out of nowhere – $1,030 made by ETH”.
As Bitcoin and Ethereum prices skyrocketed, their trading volumes quickly rose to record highs. The price of Ethereum has continued to rise to $ 1,090 and is currently at $ 1,005 at the time of writing.
Before the new year, crypto traders kept their fingers crossed that the price of BTC would exceed $ 30K, after reaching a record high of $29,200 on December 31. Two days later, Bitcoin broke the $ 30,000 threshold, and for the first time in its history jumped to $34,800, although at the time of writing, it corrected to $ 31,780.
By the end of 2021, Bitcoin can reach 75-100 thousand dollars
Now that Bitcoin exceeds $ 30,000, its growth is probably not over yet. According to the CEO of Binance in the US Catherine Kohli, the cryptocurrency has a good chance of reaching the level of $75 to 100 000 by the end of the year.
Remember the bet of crypto investors about the forecast of the analyst PlanB, when they put millions on the fact that it will not be confirmed (we wrote about it)? Are they now willing to bet that by the end of 2021, Bitcoin will never get close to $100K. In November, two crypto investment directors also challenged analyst PlanB’s growth scenario.
Based on its S2F (stock-to-flow ratio) model, the latter assures that by December 2021, the price of the BTC will reach the level of $ 100 to $ 288,000. And he’s not the only one considering such a jump in asset value.
The boss of Binance’s US subsidiary, Catherine Kohli, doesn’t think such a scenario is entirely improbable. In an interview with KLTA, the executive recalls that in less than a month, Bitcoin has risen from $ 19K to $34K.
And according to her, the growing interest of institutional investors in the crypto asset gives hope for the continuation of this growth. Katherine Kohli, however, is less categorical than PlanB.
“While we thought maybe $ 50,000 made sense, that figure would definitely be a little higher,” suggests the CEO of Binance US. “I think that by the end of 2021, we will reach the level of 75 to 100K $ per BTC,” she suggests.
Other major players even expect a much larger increase, but do not always specify the deadline. Guggenheim Partners LLC, a recognized institutional investor, has announced its intention to allocate 10% of one of its funds to bitcoin.
And if a company is considering such an investment, it is because of the potential profit. For its chief investment officer, Scott Minerd, the target value of about $ 400,000 per BTC is quite real.
“Our experience makes us think that Bitcoin can reach 40K. This is based on its deficit and its valuation compared to other assets such as gold”, he said in mid-December, 2020.
Dan Held, Development Director of the Kraken exchange, makes his move in terms of forecasting. According to him, in 2021, Bitcoin may experience a “super cycle”. With what result? The price reaches a million dollars.
Buying BTC: Mission Impossible? Liquidity is declining
Glassnode estimates that 78% of the Bitcoin supply is illiquid. Obviously, the number of coins actually available for purchase and sale is very small today. But for cryptocurrency holders, this is not a disadvantage.
The number of crypto-coins is not unlimited. It is even already defined with a limit of 21 million. Today, 88.5% of the total amount of Bitcoins is mined. Thus, their number in circulation is approximately 18.6 million.
However, about 3 million of these BTC will no longer be available, for example, due to the loss of the private key.
As a result, there are 4.2 million BTC left for buying and selling. Obviously, these coins are “hard to buy”. And it is expected that this trend will only increase. Cryptocurrency is increasingly asserting itself as a mean of saving. Investors, including institutional investors, prefer to keep their assets in BTC.
Bitcoin then acts as a safe haven for storing wealth. But as a result, fewer coins are available for sale and purchase for new buyers. This situation also has its advantages.
“If many Bitcoins are illiquid, there is a supply crisis that eases the pressure to sell BTC in the market,” Glassnode notes. The decline in the liquidity of crypto assets reflects the interest of investors, but is also a “potential bullish signal”.
Thus, the illiquidity of Bitcoin affects the value of assets. The number of illiquid BTC is 14.5 million. And only 4.2 million fall into the liquid category. So this represents only 22% of the existing supply.
“We see a clear upward trend. This indicates that the current bull market is fueled by a staggering level of illiquidity, ” Glassnode analyzes.
Ethereum Price Up 45% in 24 Hours: what is driving the ETH rally?
Ethereum is also enjoying a rally thanks to the fast-growing decentralized finance (DeFi) sector, and the launch of the long-awaited ETH 2.0, which triggered the transition to a Proof-of-Stake consensus mechanism from the current Proof-of-Work. . For example, open interest in Ethereum Futures soared to a record high of $ 2.21 billion at the end of last month.
The price of Ethereum has achieved the largest single-day price increase in the history of the cryptocurrency, rising by 45% in 24 hours. But what is behind the ETH price rally?
Ethereum, the second-largest coin by market capitalization, is trading at $ 981 today, according to CoinMarketCap, and is still about $ 400 below the all-time high that was set in January 2018.
Ether’s incredible 24-hour rise can probably be attributed to its growing utility in decentralized finance, NFT support, and Ethereum network upgrades with the launch of pos in the beacon chain.
As much as it looks like the crypto bull run of 2017, Ethereum’s performance may be the result of a recent surge in interest in Bitcoin, forcing investors to look for a better altcoin.
It seems that as the BTC continues to break through resistance levels and grow higher, reaching a new historical high over the weekend, investors are now looking for better alternative cryptocurrencies.
Crypto investor, CEO and founder of Nugget’s News Alex Saunders tweeted:
“When you witness how BTC goes from $10k to $20k without a rollback and then pumped up to $ 34k in just a few weeks, can you blame those fighting for $ 1,400 in ETH right now? We watched in awe as Bitcoin was overvalued as an asset. The same process will soon be tracked for ETH”.
In 2017, events in the crypto market also led to Ethereum rising to new heights after the BTC reached $ 20,000, which is very similar to the current price of ETH. CNBC host and crypto trader Ran Neuner pointed out the similarities on Twitter:
“Is this an exact repeat of 2017? On December 18, 2017, Bitcoin reaches ATH. ETH grows and doubles from December 18 to January 15.”
Hint of a hunt for an alternative to the cryptocurrency king or altcoin season? Soon Neuner added:
“This is the time when all the ‘maximalists’ start shilling ETH, and all the guys who make crypto charts on Youtube start focusing on ETH”.
Two days before the Ether rose to a new three-year high, Gemini digital exchange founder Cameron Winklevoss tweeted:
“ETH was the most profitable asset (up 450%) in 2020, but still below its historical high. Today it’s the equivalent of 15K and I would take that bet all day”.
Ethereum is the second-largest cryptocurrency by market capitalization, with a total value currently of $ 119 billion, according to CoinMarketCap. While the asset price gains are being supported by the astronomical bullish movement of the BTC, another important factor seems to be related to the announcement that CME Group is launching ETH futures on February 8, as institutional demand for Ether grows.
In addition to its value as an institutional hedge, is the successful implementation of EIP 1559 in the ETH 2.0 update to the Beacon Chain. Ethereum Improvement Proposal (EIP) 1559 has two main objectives: it sets the market rate for enabling blocks and effectively burns most of the ETH in transaction fees. This change in the management of Ethereum gas, has serious implications for the monetary system and policies of Ethereum EIP 1559.
Burning the bulk of ETH in transaction fees provides a deflationary mechanism for the supply of Ether, which increases its scarcity and long-term security, potentially making it as effective a defense against fiat currency inflation as Bitcoin is. It is not for nothing that Ethereum is called the queen of the crypto industry.
Ethereum Price Forecast
Nugget’s News CEO and founder Alex Saunders predicts huge growth for Ethereum based on the implementation of EIP 1559 in tandem with its surge in utility for DeFi. He tweeted:
“Many are happy that 10K $ for BTC is possible. More exciting is that $ 20K for ETH is also possible. Inflated target price? I don’t think. Previous cycle coefficient peaks: DeFi + DWeb + Gaming + NFTs + ETH2 +EIP1559. This is the formula for success”.
Crypto investor Ryan Sean Adams also believes that ” the price of ETH still fell short of fundamentals”. He tweeted his prediction:
“$1,000 ETH is just a pit stop on the way to $10,000”.
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