Yes, these are very interesting weeks for cryptocurrency lovers, both in terms of prices and news. Bitcoin and Ethereum are dragging the whole world of Blockchain and digital currencies into what appears to be a second Bull Run with still unpredictable results. We try to analyze prices, charts and how cryptocurrencies are reacting to the most interesting market news.
Bitcoin, MicroStrategy and Warren Buffett
Let’s obviously start with the number one cryptocurrency in the world by capitalization and by diffusion. In recent weeks, Bitcoin has seen an excellent price increase after the consolidation phase that has held it between $ 8,000 and $ 10,000 for more than two months. The cryptocurrency is undoubtedly one of the best performing assets of 2020, recording a gain of 220% in just 5 and a half months from the low reached on March 13 at $ 3860. The chart in any time frame supports the bullish analysis which sees the next target of $ 13,000.
While technical analysis continues to show a lot of interest in the digital currency, fundamental analysis does nothing but underline how much anyone in the financial world is looking for a solution to the devaluation of fiat currencies and the non-stop printing of the FEDs to cope to the COVID-19 crisis. Together with gold, Bitcoin proves to be totally detached from traditional finance, continuing its undaunted rise and making many of the personalities or companies that had denigrated it in recent years change their mind. On August 11, MicroStrategy (Nasdaq: MSTR), the world’s largest business intelligence firm adopted Bitcoin as its main reserve asset after purchasing $ 250 million in BTC. The company’s CEO, Michael J. Saylor, said: “This move reflects our confidence in Bitcoin as a store of value and as a very attractive long-term investment.” Not only MicroStrategy, but also Warren Buffet indirectly shows interest in safer investments to protect himself from the crisis affecting the banking system. His company, Berkshire Hathaway, has completely closed positions in Goldman Sachs and has invested in gold for the first time in its history. Over the past four months, the correlation between Gold and Bitcoin has been very strong, demonstrating once again how more and more investors are starting to see the cryptocurrency as a real store of value.
Ethereum 2.0, DeFi and the fee problem
If we want to talk about the best assets in 2020, we have to talk about Ethereum and the incredible 380% gain which from $ 90 brought the Altcoin up to $ 440. The chart reflects a lot the one of BTCUSD which as we know tends to drag all the Altcoins when there are sudden movements, given the strong correlation. If on the one hand the graphs are very similar, on the other the reasons are different. In the world of Ethereum, a very interesting sector is developing, namely that of DeFi, which thanks to projects such as Compound, Maker, Aave and Uniswap is showing a very strong interest.
According to many experts, the DeFi phenomenon could do to the price of Ethereum what ICOs did in the famous bull run of 2017. In addition to the world of DeFi, a strong interest is accumulating around the cryptocurrency to see how the network will react to the transition to version 2.0 which will introduce, as a major feature, the transition from a PoW to PoS consensus algorithm. For all users of platforms and DApps, this update is necessary to fix many problems related to scalability and the disproportionate increase in fees per transaction, which a few days ago even reached $ 99 per transaction.
In short, if on the one hand Bitcoin is increasingly carving out its share of the market even in the portfolio of companies and private investors who understand its potential, Ethereum is instead an open-air construction site that promises, if everything is maintained, a future with a vibrant network and a very dynamic and innovative community. The bull run and FOMO (Fear of Missing Out) seem to be upon us and the mistakes made in 2017 seem a long way off, given regulation, investor confidence and the desire to protect against an impending devaluation of global markets.