As 2020 attracts to an in depth, the cryptocurrency area is in an thrilling place. After plenty of optimistic items of stories, together with main investments, new buying gateways and excessive demand, Bitcoin is nearer to the $20ok mark than it has ever been.
Additionally, past Bitcoin, crypto markets, usually, are on the middle of extra consideration than ever earlier than. As a outcome, the DeFi ecosystem is burgeoning; Ethereum is making progress towards the launch of Eth2.0. If issues proceed alongside this trajectory, 2021 could possibly be an excellent yr for cryptocurrency.
Recently, Finance Magnates sat down with Simon Peters, Market Analyst at eToro, to debate latest market actions within the cryptocurrency area, in addition to what a very powerful developments and moments of 2020 have been to date.
This is an excerpt that has been edited for readability and size. To hear Finance Magnates’ full interview with Simon Peters, Market Analyst at eToro, go to us on Soundcloud or Youtube.
“The Recent Price Movement Has Been Pretty Astonishing, to Say the Least.”
We requested Peters about his distinctive method to market evaluation.
“I try to keep things as simple as possible,” Peters mentioned. “There’s a lot of information out there; there are a lot of technical analysis strategies. Because I’m more ‘long-term’, I tend to look at the bigger picture and the higher time frames.”
“On top of that, I focus on the fundamentals as well: what’s actually happening in the crypto space and why we are seeing these price moves happening,” he mentioned. “I study the macros as well as what’s happening with each blockchain and token specifically.”
We requested Peters what sorts of basic developments that he sees driving Bitcoin in the intervening time.
“The recent price movement has been pretty astonishing, to say the least,” he mentioned. Why is it taking place? “I think it stems indirectly from COVID. That’s been a big factor for crypto markets.”
“Where we saw the crash in March, we saw a big selloff that week, we learned about economies, especially in the US, going into lockdown,” and the way Bitcoin reacts to that, Peters mentioned.
“Now that we’ve got a better idea in terms of what governments and central banks are doing regarding stimulus to prop up these global economies, the ‘bitcoin as an inflation hedge’ narrative has grown in strength since then,” he continued. “We’ve seen not just institutional investors and retail investors go on board, but listed companies actually buy Bitcoin for this purpose as well.”
Additionally, Peters pointed to the latest information that Paypal could be permitting its customers to buy and spend cryptocurrencies: “they’ve opened up crypto to the 350-odd million registered users that they have, which I think has been pretty positive for the space as a whole.”
“With a Price Increase That Happens That Fast, You Always Have to Anticipate a Period of Consolidation or Correction.”
Therefore, regardless of the truth that BTC’s latest push to $20ok has occurred moderately rapidly, Peters believes that the pace of the transfer was “warranted to some degree.”
“What we are seeing is a growing trend where the amount of Bitcoin that’s being held in exchange wallets is decreasing as the demand for Bitcoin is increasing,” he mentioned. “That warrants the price increase that we have seen.”
However, “with a price increase that happens that fast, you always have to anticipate a period of consolidation or correction, so I think that’s on the cards,” he mentioned. Still, “the overall trend, given what we’ve seen with this increase in ‘holding mentality’ amongst investors…that just spells good news for the price of crypto overall in the years to come.”
While value will increase could also be the principle supply of hype round Bitcoin and different cryptocurrencies, Peters believes that BTC truly has a a lot deeper worth by way of its potential advantages to society.
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”Bitcoin Is the Natural Transition to the ‘New Money.’”
“You hear about Bitcoin being the ‘future of money’, and naturally you want to look at the history of money and how we’ve gotten to the state that we are in,” he mentioned. “The more you look at the history of money, and how we’ve gone from the exchange of bars to gold coins, to dollars backed by gold, to what we have now, Bitcoin is the natural transition to the ‘new money.’”
“New money,” on this case, refers to a monetary worth system that’s “peer-to-peer and has no central authority.”
“I think the 2008 financial crisis highlighted a need for that,” he mentioned. “If we do see another financial crisis…as bad as it sounds, a negative event like that could be positive for crypto going forward.”
Is one other monetary disaster on the horizon? “It could happen,” Peters mentioned.
“If you look at stock markets and the amount of liquidity that’s being pumped into the system at the moment, you see stock prices going higher and higher, and some stock prices going even more volatile than Bitcoin this year, which is interesting to see,” he mentioned. “How much higher can they keep going?”
“You have to ask yourself the question: when will we see a correction?” he mentioned.
However, “whether this will turn into a full-blown financial crisis, we’ll have to, unfortunately, wait and see, but, if we do get to that situation, where there are restrictions on withdrawing cash and withdrawing money, that could present an opportunity for crypto. With crypto, you can freely move your money around, and no one can tell you what to do with it.”
“Bitcoin Has the Name; It’s the ‘Brand’ That People Associate the Crypto World With.”
Still, it’s unclear whether or not this ‘new money’ will probably be Bitcoin or one other cryptocurrency. After all, Bitcoin’s scalability points have induced it to tackle extra of a job as a kind of ‘digital gold’ than ‘digital cash’ that it might have initially been created to be. In different phrases, BTC is way more sensible as an asset to purchase and maintain than to attempt to use for on a regular basis purchases.
“At the moment, it seems that Bitcoin is a ‘store-of-value’, ‘inflation hedge’, or ‘digital gold’. That seems to be the direction it’s going in, especially in times like now when we’re seeing central bank inflation and traditional markets increasing the monetary supply,” he mentioned.
“There seem to be more advocates in support of Bitcoin for those reasons, but I think that in time when volatility decreases, and we see things stabilize, it may be seen as more of a currency,” Peters defined, including that second-layer options could possibly be used to make Bitcoin extra appropriate for this function.
Of course, “there’s also an ongoing argument going for central bank digital currencies (CBDCs) that says developing CBDCs negates the need for having a currency like Bitcoin. In some ways, you could argue that.”
However, “even though it’s technically a crypto asset, a CBDC could be highly centralized, and I think that if people do lose trust in the governmental financial system going forward, then it may just prompt the transition toward alternative assets.”
And Peters believes that “Bitcoin, more than any other currency at this time,” has the potential to be the choice asset of selection.
“Bitcoin has the name; it’s the ‘brand’ that people associate the crypto world with,” he mentioned.
Peters mentioned that past the Bitcoin world, as thrilling because it has been in latest weeks, there’s various promising exercise within the Ether area.
“What we’re seeing on Ethereum is quite exciting,” he mentioned, particularly mentioning the progress that Ethereum has made towards launching Eth2.0.
Peters mentioned that Eth2.0 will “enable more transactions” to run by means of the Ethereum community, and will additionally decrease gasoline charges. In flip, this might enhance Ethereum’s viability because the potential ‘backbone’ of the burgeoning decentralized finance (DeFi) ecosystem.
Peters mentioned that regardless of the truth that “there are similarities to the ICO wave we saw back in 2017,” this time round, “there are some really good projects out there.”
This is an excerpt. To hear Finance Magnates’ full interview with Simon Peters, Market Analyst at eToro, go to us on Soundcloud or Youtube.