Bitcoin what is next

Why Is Bitcoin Going Up, and Will It Crash Soon? What’s Next as Price Doubles to $40K

Bradley Keoun

Muyao Shen

Why Is Bitcoin Going Up, and Will It Crash Soon? What’s Next as Price Doubles to $40K

Bitcoin’s prices reached an all-time high of above $40,000 less than a month after breaking $20,000 for the first time. Since the start of the most recent rally, ostensibly begun in October, its value has increased fourfold.

So for pros and newbies alike, or if you want to be the cryptocurrency expert at your next Zoom party, it’s natural to ask: Why are prices going up, and will bitcoin crash?

Bitcoin was invented just 12 years ago as a new type of electronic payment system, built atop an Internet-based computing network that no single person, company or government could control. The reality is the bitcoin cryptocurrency’s trading history is so short, with methods for valuing the asset still largely untested, that nobody really knows for sure what it should be worth now or in the future.

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That hasn’t stopped digital-asset investors or even Wall Street analysts from putting out price forecasts ranging from $50,000 to $400,000 or beyond.

Based on CoinDesk’s reporting, here are a few key reasons why bitcoin prices have recently rallied:

• Demand from institutional buyers, many of them eyeing bitcoin as a hedge against inflation. The cryptocurrency is seen as a hedge against inflation because, under the network’s original programming, only 21 million bitcoins can ever be created; so there’s a contrast with central banks like the Federal Reserve that can decide based on a committee vote to print more money. Big asset managers including Tudor Investment and Guggenheim Partners have announced bitcoin purchases or wagered on prices using futures contracts on the Chicago-based CME exchange. Even old-line Wall Street firms such as Morgan Stanley have weighed in with bullish pronouncements. Analysts at JPMorgan Chase, the biggest U.S. bank, recently predicted a price of $146,000 over the long term.
• The U.S. dollar’s decline in foreign exchange markets. The U.S. Dollar Index, a gauge of the dollar’s value against major world currencies like the euro and Japanese yen, slid 6.8% in 2020 and is down again in 2021. That’s key for bitcoin because the cryptocurrency’s price is mostly denominated in U.S. dollars. Possible reasons for the greenback’s decline include the Federal Reserve’s $3 trillion-plus of money printing over the past year, which is roughly three-quarters of the entire amount previously created in the U.S. central bank’s 108-year history. Images of protestors storming the U.S. Capitol on Wednesday probably didn’t burnish America’s leadership role on the global stage, and now many economists are predicting that big spending plans under a Democratic-controlled government would lead to new stimulus bills and potentially outsize government budget deficits for years to come. Much of those extra costs could be financed through additional Fed money printing.
• Retail purchases. Many individuals are speculating on bitcoin prices, and it’s become increasingly easy to buy bitcoin, with big services like PayPal enabling purchases last year. Analysts for the digital-asset firm ByteTree noted this week that blockchain data appear to show a high concentration of bitcoin purchases in the amount of $600 — the same amount as the American stimulus checks sent out in the latest U.S. coronavirus emergency aid package.

All this may have led to a tremendous rally over the past few months. But could bitcoin prices crash? Of course they could, several analysts told CoinDesk.

The cryptocurrency’s price is notoriously volatile, and substantial and unexpected price swings aren’t uncommon. Below is a sampling of comments from cryptocurrency analysts and other financial experts on how a pullback might look, and what might cause it.

• Bitcoin “has been and remains extremely volatile,” said Joe DiPasquale, CEO, BitBull Capital, a cryptocurrency-focused hedge fund. As recently as Monday, he noted, after prices had climbed to a new all-time high, they tumbled almost $7,000. “What causes this is that people can use lots of leverage, so they can easily get washed out.” He sees a correction as possible, though there appear to be plenty of interested buyers around $28,000, so that level might function like a price support.
• There hasn’t been a single year since 2013 when prices have not fallen at least 25% from a high point reached earlier in that year, said Gavin Smith, CEO of the digital-asset firm Panxora. He said he wouldn’t be surprised to see bitcoin prices rise to $70,000 or $80,000, nor a setback of 40%. Medium term, he’s bullish: “Over a three-year period, this is a great asset.” But over the long term, there’s a risk that technological developments could overtake bitcoin. “Even with quantum computing, there’s nothing on the horizon that indicates that could happen,” he says, “but it’s always dangerous to completely ignore the risk.”
• Bitcoin prices could rally two to three times from their current level before falling back to about where they are now, said Mike Venuto, co-portfolio manager of the Amplify Transformational Data Sharing exchange-traded fund, which invests in blockchain-related stocks. That would imply a retracement of more than two-thirds from that hypothetically new all-time high. “What’ll cause a crash more likely is overexuberance on the upside. I don’t think we’re there yet.”
• “There will be swings, and yes, the swings will be wild,” said Denis Vinokourov, head of research for the cryptocurrency prime broker Bequant. “You have a lot of retail flow that tends to panic.” He sees prices going up in the long term, at least partly based on the bullish expectations of big Wall Street firms. “Can it go to $4,000? Yes.” One potential trigger for a rapid sell-off could be any actions brought by authorities against the company behind tether (USDT), a privately issued, dollar-linked digital token known as a “stablecoin” that has become a key source of liquidity in digital-asset markets. New York State prosecutors are currently battling Tether in court due to its finances.
• “The history of financial markets is the history of bubbles,» said James Angel, Georgetown University finance professor. He notes that authorities could move to crimp the bitcoin rally if they start to get worried that it’s becoming a threat. “Almost everybody who tries to start their own money does so in competition with a national currency, and it usually gets shoved aside by regulators.”
• «While we’re currently seeing an unequivocal expression in the market’s bullish sentiment, a correction could well be on the horizon,» said Sui Chung, CEO of CF Benchmarks, a cryptocurrency provider. «This is a natural part of market mechanics. While it may dampen near-term enthusiasm, it will ensure future price rises remain grounded.»
• “There is likely to be profit taking along the way, causing temporary dips,» said Guy Hirsch, managing director for the U.S. at the trading platform eToro. «But given the extraordinary amounts of adoption by institutions, it would be a surprise if bitcoin dropped below $20,000 any time soon.”

So for the Zoom party, you can tell them: Yes, according to the experts, a crash is probably coming but that’s typical for bitcoin, and if history is any guide, prices will probably recover.

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The Next Bitcoin: What Cryptocurrencies Will Explode in 2021?

Published on May 16, 2021

What is the next cryptocurrency to explode in 2021?

What coins can you buy right now to make it big in the near future?

These and more are the types of questions being asked by the many crypto bounty hunters who want to cash in on the historic run we have seen over the last few months.

The price of Bitcoin went up from $5,300 USD to over $60,000 in less than 14 months (March 2020 – April 2021).

With that said, we have also seen the markings of what is truly a risky investment – price drops of 30% and higher within a matter of hours.

In your bid for the next big cryptocurrency, you should keep in mind that the long-term investment value of crypto-assets is no sure thing. You could make a lot of money or lose everything.

Table of Contents

What are Cryptocurrencies?

A cryptocurrency is a digital currency or asset designed to facilitate the purchase of goods and services similar to fiat money.

Unlike traditional currencies that are controlled by a sovereign government’s Central Bank, cryptocurrencies are decentralized and are protected using cryptography.

Transactions involving crypto occur on a public ledger (Blockchain) which records them for verification and addition to the blockchain.

Today, there are thousands of cryptocurrencies with various missions, features, utility, and downsides.

What is Bitcoin?

Bitcoin is the most popular cryptocurrency in the world and the one with the highest market capitalization – over $1 trillion as of May 2021.

The idea of Bitcoin was first introduced by Satochi Nakamoto in 2008 (real identity of the founder is unknown).

Several other crypto coins have since been designed to mimic Bitcoin. These Bitcoin alternatives are referred to as “altcoins”.

What Cryptocurrency Will Explode Like Bitcoin in 2021?

The next crypto winner is anyone’s guess. Given that there are over 9,000 coins out there on the interwebs, there is no easy way to analyze them all.

One option for streamlining your choice is to take a look at its public appeal as measured by the coins market capitalization.

The top-9 digital assets like Bitcoin based on this metric as of May 2021 are:

1. Ethereum (ETH)

Ethereum is a decentralized blockchain that uses Ether as its native currency.

The Ethereum blockchain is used to facilitate smart contracts and it serves as a platform for creating and running other crypto-coins.

Ethereum was first introduced by Vitalik Buterin in 2013. It had a market cap of over $418 billion as of May 16, 2021.

Learn more about Ethereum here.

2. Binance Coin (BNB)

Binance coin was launched in 2017 and is the token issued by Binance, one of the world’s largest cryptocurrecies exchanges.

It is a stable coin and was initially built on the Ethereum blockchain. It now works on the Binance Chain.

Binance Coin had a market cap of $87 billion on May 16, 2021.

3. Cardano (ADA)

Cardano uses the Ouroboros peer-reviewed blockchain protocol to facilitate secure payments and protect privacy. Its currency is known as ADA.

Cardano uses a “proof-of-stake” consensus mechanism to verify transactions on the blockchain which is more efficient compared to the “proof-of-work” system used by Bitcoin and Ethereum.

Cardano was founded by Charles Hoskinson in 2015. As of May 16, 2021, ADA had a market cap of $72 billion.

4. Dogecoin

Dogecoin was created by Billy Markus as a meme coin in 2013 and has since grown rapidly in popularity due to interest from Elon Musk.

There is no limit to the number of Dogecoin that can be mined and its market cap as of May 16, 2021, is $66.30 billion.

The highest price of 1 DOGE was reached on May 8, 2021, when it hit $0.7376 per coin.

5. Ripple (XRP)

The RippleNet platform is a digital payment network and protocol that is used by many banks for processing global transactions.

The company also created a native token known as XRP and it is based on an open-source blockchain known as the XRP Ledger.

XRP transactions are completed very fast (3-5 seconds) compared to Bitcoin which takes several minutes. It also uses very little energy.

XRP was first launched in 2012. As of May 16, 2021, it had a market cap of $51 billion.

Learn more about XRP.

6. Polkadot (DOT)

Polkadot was founded by Gavin Wood, Peter Czaban, and Robert Habermeier. Its token is referred to as DOT.

The Polkadot platform and architecture is used to facilitate the operation of other blockchains and cryptocurrencies.

DOT had a market cap of $40 billion as of May 16, 2021.

7. Bitcoin Cash (BCH)

Bitcoin Cash was created via a hard fork of Bitcoin in 2017. It is a separate cryptocurrency and is limited to a supply of 21 million coins.

Bitcoin Cash had a market cap of $22 billion as of May 16, 2021.

8. Litecoin (LTC)

Litecoin was founded by Charlie Lee in 2011, a former Google employee. It is a peer-to-peer internet currency similar to Bitcoin, although its Blockchain can handle faster transactions.

The maximum litecoin that can be produced on the network is 84 million. Litecoin’s market cap as of May 16, 2021, was $20 billion.

9. Stellar (XLM)

This decentralized payment protocol facilitates global payment transactions between currencies – both fiat and digital at a low cost. It was founded in 2014 by Jed McCaleb (Ripple co-founder) and Joyce Kim.

The Stellar network has been used in various real-world applications including micro-financing, non-cash remittances, and other digital infrastructures.

Its market cap as of May 16, 2021, was $16 billion.

Fifteen other coins that have been trending a lot in recent times are:

• Uniswap (UNI)
• Chainlink (LINK)
• Solana (SOL)
• VeChain (VET)
• Ethereum Classic (ETC)
• Polygon (MATIC)
• EOS (EOS)
• TRON (TRX)
• Wrapped Bitcoin (WBTC)
• Filecoin (FIL)
• Monero (XMR)
• Neo (NEO)
• Aave (AAVE)
• Shiba Inu (SHIB)
• IOTA (MIOTA)

How To Buy Cryptocurrency in Canada

There are many crypto exchanges and platforms offering trading in the popular coins.

1. Coinsmart

This exchange offers access to 11 coins. It also allows credit card funding in addition to Interac e-Transfer, EFT, and bank wire.

Coinsmart works well for beginners and experienced crypto investors alike, and you can open an account and start trading almost instantly.

This company is based in Canada and uses Bitgo for cold storage of digital assets.

• Coins offered: BTC, ETH, LTC, XRP, USDT, BCH, XLM, ADA, QCAD, EOS, NEO
• Promotion: Get a $15 bonus when you open an account and deposit at least $15
• Review: Coinsmart Canada Review

2. Wealthsimple Crypto

This platform is owned by Wealthsimple and offers trades in two coins (BTC and ETH).

It makes it easy for newbie crypto traders to buy Bitcoin and Ethereum with just one click and you can use its desktop interface or mbile app on iOS and Android devices.

Coins on Wealthsimple Crypto are held by Gemini Trust Company LLC, a custodian with $200 million in cold storage insurance coverage.

Note that you can’t transfer your crypto holdings from Wealthsimple Crypto to an offline personal digital wallet.

• Coins offered: BTC and ETH
• Promotion: New clients get a $25 cash bonus when they open an account and trade at least $100.
• Review: Wealthsimple Crypto Review.

3. NDAX

This cryptocurrency exchange allows users to buy and sell 11 different coins. It has one of the lowest trading fees and new users can buy and sell coins within minutes of opening an account via instant ID verification.

NDAX is available on all devices including iOS and Android phones. The company is based in Canada.

• Coins offered: BTC, ETH, LTC, XRP, USDT, BCH, XLM, LINK, ADA, DOT, EOS, DOGE
• Promotion: Get a $10 cash bonus when you open an account and fund it
• Review: NDAX review

4. Bitbuy

This crypto exchange was founded in 2016 can be used to buy and sell 7 different coins. It is also based in Canada.

• Coins offered: BTC, BCH, XRP, XLM, ETH, LTC, and EOS
• Promotion: Get a $20 bonus when you sign up and make an initial deposit of $250 or more
• Review: Bitbuy Review

5. Coinbase

This is the only cryptocurrency exchange that is publicly traded on a stock exchange. It is based in the U.S. and supports users from over 100 countries.

• Coins offered: 50+ coins including many of the popular ones.
• Promotion: Get $10 USD in BTC when you trade cryptocurrency worth $100 USD or more
• Learn more: Best Crypto Exchange Bonuses

Should You Invest in Cryptocurrency?

While we have listed the top cryptocurrencies based on their market capitalization as of this writing, these top contenders are always in flux due to the fast-paced nature of the cryptocurrency market.

Given its speculative nature, investing in cryptocurrencies is not advisable for many people, especially if you are using funds you cannot afford to lose.

Related reading:

What coins are you betting on? Let us know in the comments.

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