In 2020, the cryptocurrency market showed significant growth. Since January, bitcoin has risen in price by 160%, to the current level...
In 2020, the cryptocurrency market showed significant growth. Since January, bitcoin has risen in price by 160%, to the current level of $ 12,300. Ethereum has added 220% to the price over the same period and now costs $ 430. Many altcoins with smaller capitalization brought investors even greater profits, writes RBC Crypto . For example, the Cardano token (ADA) rate has grown by more than 350% since the beginning of the year, to $ 0.14. The Chainlink (Link) coin distinguished itself the most, over the past 9 incomplete months its value has increased by 950% and is now at $ 19.
Bitcoin or Ethereum?
Investor interest has returned to the cryptocurrency market again, says Yuri Mazur, head of the data analysis department at CEX.IO Broker. He said that there is an accumulation of long positions in the main digital assets: Bitcoin, Ethereum and Ripple. This is due to the gradual change in the focus of investors from the stock market to alternative platforms, and digital assets are one of the most potentially profitable instruments.
Ethereum is a promising asset to buy, Mazur said. According to his forecasts, the rate of the coin may soon rise to $ 500. The growth driver will be the expectations of the release of the second version of the altcoin network, which will allow passively increasing the number of coins for storing them in the wallet.
“We believe that Ethereum is the most promising cryptocurrency for the coming weeks or even months, as players are more aggressively gaining long positions on it in anticipation of ETH's transition to the new Proof of Stake algorithm. Most likely, it is this news, or rather the expectation of growth before this news, that will force the quotes of digital assets to rise after ETH ... We believe that the goal of the ETH / USD pair may well be a psychological mark of $ 500, ”Mazur said.
He clarified that one should not deny the possibility of a correction in the Ethereum rate. The same situation may occur that happened to BTC in May of this year, when, after unfulfilled hopes for a sharp rise in prices against the background of halving, it significantly corrected. Nevertheless, in the coming days, the main focus of investors will be converging on ETH.
The founder of the STASIS stable cryptocurrency platform, Grigory Klumov, agreed that the digital asset market is now in a growth phase, but expressed his greatest preference for bitcoin. This is the "king of the crypto market", and investments in it will pay off within a few years.
“Cryptocurrencies are in a cyclical bull market, so you can invest in BTC every day. Bitcoin is the king of the market, a blue chip, and as I have said on numerous occasions, there is no bad time to buy it. You can buy bitcoins any day - within a few years it will become a successful investment, ”Klumov is sure.
DeFi Market Madness
In 2020, the Decentralized Finance (DeFi) sector attracted significant investor attention. It features applications, exchanges and other services. Users of such platforms do not need to store their cryptocurrency on them; they can trade it directly from their cold wallet.
Most DeFi platforms have their own tokens. Over the past six months, they have shown explosive growth. The best example here is the DeFi platform coin yEarn Finance. It first appeared on the stock exchange on July 18, at that time its price was about $ 35. A week later, by July 25, the asset rose by 13,000% to $ 4,800. The current cost is $ 7000.
One of the growth drivers of the DeFi token rate is listing on large platforms. For example, on August 12, Coinbase announced that it would open trading with the Numeraire (NMR) coin. Within a few minutes after that, its rate rose by about 200%, from $ 20 to $ 55, after that it slightly adjusted. Today the cryptocurrency was added by the Binance platform. Against this background, the NMR went up from $ 50 to $ 71.
What is happening now on the DeFi market can be called a real madness, says private trader Alexander Boyarintsev. Tokens from decentralized projects can rise in price by thousands of percent per day. This is starting to resemble a bubble and a correction is likely, but it is not known when it will come.
“Many DeFi tokens grow sometimes by 1000% per day, however, ETH is not lagging behind in this regard, having already surpassed the main cryptocurrency bitcoin in growth rate. I believe that a bubble in the DeFi market is now inflating, and many investors rushed there for X's, a clouding of mind occurs in my head. It is difficult to say when this crazy race will end, but the faster the growth, the greater the likelihood of a correction, ”Boyarintsev warned.
He noted that you can try to participate in the DeFi token race, but investing in them is extremely risky. Therefore, you should not allocate more than 25% of the investment portfolio for this venture. It is also important to be prepared to dump new assets as soon as the first signs of a correction appear.
Boyarintsev named a number of DeFi tokens that he is interested in. These included:
- ChainLink - a platform for managing smart contracts with external oracles;
- Lend - a platform for lending, cryptocurrency is used for collateral;
- MITH is a social network with its own internal cryptocurrency and the possibility of withdrawing into fiat money;
- Ren is a decentralized exchange;
- Kava is a decentralized lending platform using cryptocurrency.
Klumov added that the growth of interest in the DeFi sector has continued for two quarters. In view of this, the most famous coins from the field of decentralized finance are "overheated". Buying them is risky as a correction is likely. Instead, you can look at DeFi tokens, which have not yet shown strong growth like their competitors.
“It's already scary to buy blue chips in this sector, as they can break into correction at any moment. However, when the trend is strong and the main blue chips of the sector have grown, then you can use the same strategy that works in the stock market - buy DeFi tokens that have not yet grown, ”Klumov recommended.
Klumov named the Amoveo coin (VEO) as one of the examples of a lagging token, where strong asymmetry remains and the potential profitability many times exceeds the potential risks. This platform allows users to create derivatives on the blockchain without a central counterparty in a so-called “trustless” environment. The asset in 2020 has not yet shown explosive growth, risk-ready investors can take a closer look at it and the like.
In the decentralized finance sector, it is imperative that the investor understands what DeFi is, warned Mazur. Statistics show that a third of the crypto market participants do not understand this area. In terms of risk assessment, this is a bad situation, since traders cannot fully assess their capabilities.
On August 12, a new project Yam appeared in the DeFi space. During the day, users blocked more than $ 500 million in it, against the background of this, the price of the coin reached $ 167. On the second day of the platform's operation, its developer reported the discovery of a critical vulnerability. Within half an hour after that, the Yam rate fell below $ 1, the current value is $ 0.4.
