The continued rise of Crypto –
The unique features of cryptocurrencies can become the basis for their development as an international financial instrument going forward, and in 2021 we can expect positive confirmations of this status – this will be acknowledged by the ‘’establishment’’. The rhetoric regarding cryptocurrencies has improved significantly in recent years. Even the outgoing head of the SEC, Jay Clayton, recognized bitcoin as a means of accumulation and settlement in contrast to the” inefficiency ” of current payment systems.
Stock To Flow Model
The Stock-to-Flow model – (the ratio of the current supply of an asset to its inflow to the market; the indicator allows you to assess the” rarity “of an asset, and it, in turn, can directly affect its price). This was first applied to capital markets by an anonymous Dutch investor Plan B and is often mentioned in experts’ forecasts recently. One can be skeptical about its viability, but the price of bitcoin repeats the S2 °F model with sufficient accuracy to allow for further development of the theory in accordance with the bold forecasts of the Dutch investor. The stock to flow model continues to be an effective means of predicting the price of Bitcoin.Fear and Greed Index
Since the beginning of November 2020, the ‘’Fear and Greed Index ” of the crypto market has been at levels of “extreme greed”. Under these circumstances investors are often irrational in their actions/trading, and react to green (higher prices) or red(lower prices) currency exchange rates quite impulsively.
2021 Bull Run
Already at the beginning of 2021, the cryptocurrency market has experienced an unprecedented rally and now is facing a decline of 25-30%. Historically, Bitcoin lost between 20% and 40% in 2017 and 2019. If this projected price decline occurs, it is likely to be short-lived, as there is now demand from institutional investors, and the declining price may attract even more participants – FOMO investors seize their opportunity.
Also in 2021, we may see the dawn of the second most popular cryptocurrency – Ethereum. The launch of the zero phase of Ethereum 2.0 with the transition to a new emission model was successfully held on December 1, 2020, which in the future will solve many current problems of network scalability. And the rapid development of the DeFi segment of the market, built mainly on ERC-20 tokens, contributes to the growth of the popularity of the platform itself. The market also reacted positively to the planned addition of ETH-linked derivatives to the Chicago Mercantile Exchange (CME) in February, which in the future may provide a large influx of institutional investors into the Ethereum ecosystem. A genuine rival to Bitcoin in 2021….. watch this space!!