Ethereum, the second largest cryptocurrency by market capitalisation, has crossed $600
News of Bitcoin breaching the $23,000 mark — its highest valuation ever — has electrified investors globally. With Ethereum, the second largest cryptocurrency by market capitalisation, also going past $660, market sentiment around digital currencies is more upbeat than ever before.
Bitcoin will maintain its propensity to advance in price into 2021, with macroeconomic, technical and demand versus supply indicators supportive of $50,000 target resistance, implying about a $1 trillion market cap, according to Bloomberg Crypto Outlook’s December 2020 edition. The report states, “$10,000 mark has shifted to a critical support level after serving as the crypto’s resistance mark since 2017. The year 2020 will likely be looked back upon as key to Bitcoin’s mainstream evolution”.
Khurram Shroff, the Dubai based Chairman of the IBC group and one of the region’s largest ‘HODLers’ of Bitcoin and Ethereum — colloquially referred to as a “whale”, within the cryptocurrency community — believes these all-time high valuations reflect a tipping point for decentralised digital currencies.
“I think we have to acknowledge that the pandemic has disrupted business as usual. Individual investors, and markets as a whole, are reflecting the general mood of a new beginning, which has made them far more open to cryptocurrencies. The huge stimulus packages that governments around the world announced, in the aftermath of the pandemic, means traditional fiat currencies have been hit hard by inflationary pressures. Bitcoin, with its supply capped at 21 million, is an attractive option for investors wishing to hedge against the debasement of traditional currencies. Furthermore, Bitcoin is a deflationary asset by design compared to fiat currencies which are inflationary. We saw the impact of this earlier in 2020 as we witnessed the gradual weakening of US dollar due to the pandemic which increased the dollar money supply by approximately 25 per cent,” said Shroff.
In December 2020, the Bitcoin market cap reached an all-time and had grown by over $100 billion when compared to the summer months. The market capitalisation currently sits at more than $350 billion, according to a research by Statista.
Regulation of cryptocurrencies has been area of concern for many, however Shroff says, “The primary business of government is to ensure the wellbeing of their people and driving economic growth. The strengths of decentralised cryptocurrencies lie in their iron-clad and instantly verifiable digital records. In the long-term, any market that operates with that level of investor confidence can only be good for the economy. As a crypto investor, with significant investments in digital currencies, I welcome government regulation of cryptocurrencies. However, this must be done without hindering their growth or undermining their attractiveness to investors.”