by Cody on 2021-02-15 filed under Crypto Investing
Each month, we'll share a quick report for investors on the state of the crypto market. Unfortunately, we are getting to January 2021 a little bit late, but our goal is to publish this at month end going forward.
January 2021 was a strong month for cryptocurrencies. The price of Bitcoin increased 14.11% (from 29388.94 to 33535.94). The price of Ethereum increased a whopping 88.14%, from 730.60 to 1374.57. The portfolio blend recommneded in Best Cryptocurrency to Invest In 2021 increased 64.8%. We'll take it!
Now, what drove these price increases? We point to 3 trends that we're watching.
- Institutional adoption of Bitcoin. Per Coin98 Analytics, Grayscale Bitcoin Trust bought almost 1.5 times the total amount of BTC mined in January 2021. This is just... insane. This is a single entity! It's not even that big yet. As more and larger entities pile in, Bitcoin price volatility will go down and coin prices go up.
- Increasing awareness of crypto. Crypto is having a moment in 2021. Elon Musk is tweeting about Bitcoin and Dogecoin, for some reason. Ray Dalio of Bridgewater is publishing extensively on Bitcoin as a store of wealth. Lindsay Lohan of all people has declared Bitcoin is the future, predicting it to reach $100,000. There's a vast spectrum of credibility to these viewpoints, so take them with a grain of salt. But every additional mention plants a seed in someone's mind. We predict sustained and increasing interest as celebrities opine more and more on crypto.
- Rising gas prices for Ethereum. Gas is the cost of performing a transaction on the Ethereum blockchain. As such, it's a key indicator of Ethereum scalability. In January 2021, gas prices rose 29.46%. While an increase in gas prices reflects rising demand for Ethereum, it also makes DeFi transactions more and more costly. It also threatens to sideline smaller investors. Sky high gas prices is a trend to watch for, as it could grind Ethereum increases to a halt.
Disclosure: I/we have a long position on Bitcoin and Ethereum. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Big Time Crypto).
Additional disclosure: Disclaimer: I am not an investment advisor, and this article is not meant to be a recommendation of the purchase or sale of cryptocurrency. Investors are advised to review all documents and press releases to see if the cryptocurrency fits their own investment qualifications.