After experiencing a 2-day slump during which the price of most cryptocurrencies including bitcoin, Ethereum, Ripple, and Bitcoin Cash declined significantly, the cryptocurrency market has started to recover.
Major Cryptocurrencies Surge in Value
Cryptocurrencies in the top 20 rankings of the global cryptocurrency market have recorded large gains over the past few hours. Ripple in particular demonstrated a staggering 48 percent increase in value, while bitcoin, Bitcoin Cash, Cardano, and Litecoin have risen in the range of 15 percent to 35 percent.
Although major cryptocurrencies are still down significantly from their all-time highs, bitcoin, Ethereum, Bitcoin Cash, and Ripple have all kept their “psychological thresholds.” Bitcoin has rebounded above the $10,000 mark, Ether recovered past $1,000, and Ripple did not decline below the $1 mark.
It is highly unlikely that fear, uncertainty and doubt (FUD) from the South Korean and Chinese cryptocurrency markets caused the recent correction, given its magnitude and the size of both markets. But, a reasonable explanation is the closure of bitcoin future contracts on January 17, and whales or institutional investors in the traditional finance market dumping cryptocurrencies like bitcoin to cash out their short contracts.
Over the past 12 months, Ripple has surged by 330-fold, Ether by 130-fold, and bitcoin by 19-fold, with minor corrections. It is also possible that the sudden increase of cryptocurrencies without a major drop in value led to a large correction to occur.
Previously, Ethereum creators Vitalik Buterin and Charles Hoskinson questioned the value of most cryptocurrencies in the market, given that tokens without products and users have obtained multi-billion dollar valuations within a short period of time.
With the recent correction in mind, public blockchains and cryptocurrencies within the global market will need to prove their potential and justify their market valuations by obtaining actual active user bases and useful products. Otherwise, even in a bull market like the cryptocurrency market, another major correction is inevitable.
Where Does Bitcoin and Ethereum Go Next?
In late 2017, billionaire investor Mike Novogratz predicted the price of bitcoin to achieve the $40,000 mark and Ether to surpass $1,500. If the cryptocurrency market can recover to its previous levels before January 16, when bitcoin and Ethereum were at $14,000 and $1,300 respectively, the cryptocurrency market would be in a better position to initiate stronger rallies without weak hands and speculators.
Earlier this week, during an interview with QZ, Constantin Papadimitriou, president of Pundi X, stated that the adoption of bitcoin, Ethereum, and other cryptocurrencies is rapidly increasing in India despite the government’s crackdown on the market. Consequently, the government has started to reconsider its policies and possibly regulate its cryptocurrency market, although no regulations have been finalized as of yet.
Increasing adoption of cryptocurrencies by large remittance markets like India and the Philippines will allow the global cryptocurrency market and blockchains within it to increase further in value. Major financial institutions such as Japan’s largest bank Mitsubishi UFJ Financial Group, better known as UFG, and South Korea’s second largest commercial bank Shinhan Bank have also started the development of cryptocurrency exchanges and wallet platforms.
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Last modified: March 4, 2021 5:03 PM