The latest crypto news was hardly imbued with overwhelming positivity. The market has sagged in November, and over the past six months, none of the largest cryptocurrencies have been able to grow in terms of capitalisation, while some altcoins have fallen in price by more than 50 per cent. Are we on the threshold of another major crypto fall? Let's break down market events that many analysts consider omens, and what conclusions we may draw from them.
Bitcoin (19,19 per cent down)
In November, the English segment of Twitter often used the term “Bitcoin echo bubble” under the hashtag #cryptotwitter. Sceptical analysts wrote that the cryptocurrency market is approaching the state of winter 2018, when the sharp collapse occurred for digital money — by 80 per cent of its peak prices, and is actually ready to repeat the disaster.
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For a period of time during the last month, the currency price remained below $7,000, which is below the 100-week moving average. Traders considered it a bad omen, as the last time BTC closed the week at this level, the price of the cryptocurrency had fallen by 35 per cent in the following three weeks.
However, for the last week of November, Bitcoin regained a little and closed the month at $7,750. Against this background, some analysts saw a reason for hope. If we gather estimates of sceptics and optimists, it is possible that in 2020 Bitcoin will be traded in the range from $5,000 to $16,000, while some boldly claim that in 2021 BTC will cost about $100,000.
Ethereum (16,08 per cent down)
In November, Ethereum, the cryptocurrency that pioneered the smart contract platform, fell 90 per cent from its peak in January 2018. Nouriel Roubini, an American economist, analyst and lecturer at the Leonard N. Stern School of Business at New York University, wrote that this is still far from the real cost of this altcoin — $0.
Roubini described the situation in the digital currency market as the "total apocalypse", based on the fact that Bitcoin and most altcoins are traded well below historical highs.
The same day Roubini published his tweet, one of the biggest South Korean cryptocurrency exchanges Upbit published a press release in which they acknowledged the fact of a hacker attack. The exchange lost $48.5m in Ethereum, suspended operations and blocked withdrawal of funds in Ethereum. Users will have to wait at least two weeks to regain access to their accounts in Ethereum.
Despite all this news and the fact that over the past 40 days Ethereum has lost more than 40 per cent of its value, those who purchased this cryptocurrency a year ago may still sell it at a price 30 per cent higher. It has also been announced that the ETH 2.0 upgrade will help to make more efficient use of Ethereum in 2020 for passive income, which is gradually replacing the "speculative" use of cryptocurrencies.
XRP (22,02 per cent down)
Though XRP is not the “hottest” crypto coin out there, it showed quite interesting results at the end of November.
XRP was created by the Ripple company for corporate and international payments. While being falling crypto in November, it set a record for the number of transactions on Thanksgiving. On November 28, the total amount of transferred funds was $4.52b. Nick Bugalis, Ripple's software engineer, wrote on his Twitter:
“That works out to an average sustained rate of 55 TPS for 24 hours. Pretty cool.”
According to the XRP Chart, the previous record was registered on November 23, when XRP became the leader in the TPS numbers, leading the rating of other popular cryptocurrencies, where the second and third places were taken by Bitcoin and Ethereum, respectively.
The optimistic outlook for 2020 for this currency provides its reputation as a convenient and cheap means of payment. Commissions in the XRP network are incomparably lower than in the Bitcoin network, and the transaction speed is much higher. Given its low cost ($0.2), XRP is estimated as a profitable long-term investment.
What do the forecasts look like?
Overall, despite a slight decline in capitalisation in November, the general crypto market outlook shows there are all signs that digital money will continue to gain popularity in 2020. Governments and central banks in various regions have adopted friendly cryptocurrency policies to a different extent. In the US, it is possible to use Bitcoin to make payments at the Microsoft Store and Subway or to sell them on the options market. The Canadian Revenue Agency considers and regulates digital currency as a commodity, and Australia already considers Bitcoin as a currency on an equal footing with any other. Demand for digital money may rise to a completely different level in the near future.