With the May 2021 collapse, crypto currencies started a pretty healthy corrective process after the speculative high in early 2021. The strong risk aversion in early 2020, which coincided with the Covid-19 crisis, created a significant low point in several crypto currencies. Following the release of financial stress, huge liquidity injections, and a recent drive for institutionalization, virtual currencies saw a tremendous rise that culminated in a thunderous collapse in May. The market, on the other hand, rapidly rebounded and is again on the rise. There are many of cryptos with 1-year returns in the three or four figures. Despite medium-term dangers owing to the general market direction, the challenge towards the end of 2021 will be to grasp any bullish or bearish chances.
1. Bitcoin: The Industry's Reference Crypto Currency
€600 billion in capitalization
Volumes on a daily basis by the end of 2021: €20-40 billion (5 percent of capitalization)
Change in price in 2020: + 170
Bitcoin (BTC) continues to be the most popular crypto currency and provides an excellent window into the patterns of all other cryptos. 2020 will be a watershed year for Bitcoin. Its market value grew by nearly 2.5 times in a single year! Bitcoin has exceeded the market value of businesses such as LVMH and Bank of America.
Bitcoin's rise is mostly explained by liquidity injections and the consequent decrease in financial stress, but also by the desire to institutionalize cryptocurrencies. Bitcoin will reach a tipping point in 2021. The risks would be those associated with an abusive speculative dynamic or a strong reversion to risk aversion as a result of economic readjustments.
On the other hand, Bitcoin should continue to be driven by the dropping dollar index, ongoing liquidity injections, and its future application. However, chances of corrections may materialize in the medium term as a result of potential liquidity constraints.
Read also: Bitcoin Halving: Everything You Need To Know
2. Ethereum: A Major Competitor To Bitcoin
€ 230 billion in capitalization
Volumes on a daily basis by the end of 2021: €15-30 billion (10 percent of capitalization)
Change in price in 2020: + 340
Ethereum (ETH) is the second most valuable cryptocurrency by market capitalization. ETH ranks among the top major crypto currencies in terms of average annual performance. ETH is often referred to be the world's most commonly utilized virtual money. This is because a large number of tokens (crypto-currencies issued by businesses) are dependent on the usage of ETH. The ETH may be compared to a stock market index, since its constituents would be the crypto industry's participants.
ETH, on the other hand, continues to be more volatile than Bitcoin. Daily volumes are proportionately higher in comparison to capitalization. ETH is worth monitoring in 2021, depending on the degree of agent democratization and financial hardship experienced by markets.
3. Binance Coin: A Crypto That Wants To Play It Big
€45 billion in capitalization
By the end of 2021, daily volumes will range from €1 to €3 billion (4.5 percent of capitalization)
In 2020, the price increased by 110 percent.
For its part, Binance Coin's market capitalization has risen from almost €1.7 billion to more than €3.5 billion, demonstrating the magnitude of capital flows in 2020 and indicating the split between the 2017 and 2020 rises: investment is no longer purely speculative.
Binance Coin, which is issued by the same-named platform, is one of the top ten crypto currencies in the world. Binance is one of the behemoths that has benefited from the democratization of crypto currencies in personal savings. The platform would profit from an increase in the prices of key crypto currencies. However, given the price connection between BTC and Binance Coin, any additional dips in 2021 should be closely monitored.
4. Ripple: A Passport To Decentralized Finance
€30 billion in capitalization
By the end of 2021, daily volumes will range from €2 to €6 billion.
Price increase in 2020: 135 percent.
Ripple is one of the most prominent crypto currencies on the market. Although its capitalisation has grown by more than 2.5 times over the year 2020, Ripple has benefitted less from the rebound to late 2017/early 2018 levels.