Crypto market overview
Cryptocurrencies are decentralized digital assets that are created and secured with cryptography. Prices for cryptocurrencies depend only on supply and demand. They’re not subject to bank policies and are not guaranteed by any country.
It has been a wild ride since Bitcoin launched in 2009. Astronomical profits and overnight drops, scams, and legislation misunderstandings. Yet the market is growing, evolving, and becoming safer year after year.
Currently, there are different kinds of cryptocurrencies:
- Mining-based cryptocurrencies similar to Bitcoin,
- Stablecoins that are designed to reduce price fluctuations,
- Security tokens which resemble traditional stock,
- Utility tokens, which are linked to a particular service.
You can already count cryptocurrencies by thousands, with Bitcoin still in the lead with 64% dominance.
How the crypto market is doing in 2020
During 2020, there has been a strong correlation between crypto markets and traditional financial markets. Crypto markets responded each time there was a change in Dow Jones. But this correlation seems to be weakening.
Covid-19, natural disasters, and the upcoming elections in the US – they all had their impact. It has been a challenging year all around, but after a massive crash in March, the crypto-market has recovered and keeps showing growth.
As many countries face the need for a second lockdown, adding to global economic uncertainty – a lot of investors will turn to digital currencies. In times of crisis, cryptocurrencies could become the new gold.
Fintech application usage grew exponentially in 2020 due to the coronavirus lockdowns. Blockchain technology also proved useful for tasks such as vaccination development and medical supply delivery. Some governments are already planning to develop their own digital currencies. These measures can also help economies in different ways, such as lowering the impact of US sanctions and strengthening national currencies.
Main trading Slumps of the year
When you look at the 2020 charts, you’ll notice one massive drop on March 11. A day when the market almost halved. That was the day when the World Health Organization (WHO) declared a global pandemic, as COVID-19 has spread in about 100 countries.
While governments and WHO struggled to minimize the damage and keep panic under control, the locked-down world dived deeper online. Cryptocurrencies fit perfectly into our new reality. Cashless touch-free payments, decentralized entities that can continue working remotely, and currencies that are not tied to traditional assets like oil — they all provide a stable environment for financial investors as well as common users. Slowly, but steadily the world goes digital.
Starting July, Decentralized Finance has seen three consecutive months of doubling the aggregate volume. Rolling back down 25% in October, correcting the overexcitement of previous months.
US presidential elections will affect the market, so it is time for jumps and falls again, and you can win or lose big, depending on what your educated guesses will be.
How to stay profitable nowadays
Three basic tips:
- Do your research. Almost every cryptocurrency has whitepapers available for potential investors. You shouldn’t invest if you don’t know how the coin operates or makes money. Don’t invest in a currency only because someone told you so, or it’s all the rage in the media.
- Be ready for big swings. That is why you shouldn’t invest all your funds into just one coin. Be prepared that each of your investments can crash (or soar) overnight. Your other assets will make a cushion if you’ll need to soften your fall.
- Keep it safe, and know your tools:
- You need a separate email for trading, with 2 phase authentication,
- Use cold wallets to keep your coins longterm,
- Keep smaller amounts in hot wallets for daily transactions,
- Be very careful with exchange wallets or mobile wallets, as they are the most risky ones.
If you want something more specific – Bitcoin and Etherium are the most established coins and are considered less risky than investing in Initial Coin Offerings or Initial Exchange Offerings. At the time of writing, Bitcoin was on its way to $14K, hitting its highest price in 2 years, while Etherium is on its two year low. So if you already invested in Ether – you’ll probably need an eth to btc exchange.
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