We are not even through the first quarter and Ethereum has seen a 97% rise after the successful Istanbul hard fork. Meanwhile, Bitcoin remained steady above $10,000 last week although it dipped recently. Likewise, the mobile and desktop IOTA wallet suffered a hack resulting in the theft of approximately $1.6million worth of MIOTA
By Simon Peters, Market Analyst at eToro
Ethereum has seen a 97% rise this year and we are not even through the first quarter. We have already seen the successful Istanbul hard fork, as Vitalik Buterin and team look to improve security and scalability through a range of logistical and technological upgrades. It will be interesting to see how Ether prices are impacted as the network gets closer to the next upgrade, as part of the overall Ethereum 2.0 – Serenity implementation.
Bitcoin also remained, for the most part, above $10,000 last week, although it dipped again overnight, dragging most of the other big cryptoassets with it. As I mentioned last week, the technicals look good and the cryptoasset community seems to be in agreement that the price for BTC has bottomed out.
Interestingly, XRP was the most traded cryptoasset by UK based clients last week. A lot of clients in the UK are in XRP already, so this is probably a result of them increasing their exposure to the cryptoasset during the recent increase in price performance.
Looking forward, the bitcoin halving due for later this year will be a key driver in price. Halving the block reward miners receive has previously led to a solid bull run, with the prices increasing exponentially. Given where the price is now and should investor sentiment remain positive, we could see an exceptional bull market in 2021, with the price of bitcoin even topping out around the $120,000 mark. Data models such as Stock-to-Flow, as well as analysis of previous bitcoin bull markets, also go some way to supporting this price target.
Although investors and the media do place heavy emphasis on bitcoin as a driver in price and a representative of the cryptoasset sector overall, we are seeing the dominance of bitcoin falling. Altcoins in general are performing well and bitcoin’s percentage of overall market cap has been dropping as a result. What is the reason for the altcoins’ performance? It could be that, with traditional markets’ liquidity remaining at decent levels, this liquidity has filtered through to the cryptoasset sector, having a positive impact on performance.
It does matter one Iota
Trinity Wallet, the mobile and desktop IOTA wallet developed by the IOTA Foundation, suffered a hack last week resulting in the theft of approximately $1.6million worth of MIOTA (the network’s native token). In addition, the foundation shut down the entire network and advised users not to use their Trinity wallets, while it investigated the hack.
Whilst arguably not a significant monetary amount, this latest hack again puts focus on the importance of custody of an individual’s cryptoassets. More robust security is needed to prevent hacks, while questions around the introduction of insurance to cover theft and loss of cryptoassets have again been raised, in particular when cryptoassets are being held by a third party custodian.
Cryptoasset audiences have moved from programmers to Instagrammers, but where to now?
With exemplary performance over the past few years, the investor base and audiences invested in cryptoassets have changed. Looking back at 2017, the audience went from being programmers and computer scientists at the start of the year to your average retail investor or consumer by the fourth quarter. I remember during the cryptoasset boom in 2017 walking through Canary Wharf and being pleasantly surprised to see bitcoin on the front page of City A.M and thinking crypto had hit the mainstream. If prices continue increasing, I expect mainstream media attention to return to cryptoassets, and with that, a new wave of investors. This kind of increase in awareness is also likely to attract investors who typically invest in traditional markets, such as stocks, and are now looking to achieve what they may perceive as potentially more lucrative returns through the addition of cryptoassets to their portfolios.
The cryptoasset investor landscape is evolving, but there is still some way to go in terms of adoption and everyday use of the technology. To do this, we must move from the speculation phase to a utilisation phase, although this is admittedly some way away. One way to do this could be to issue everyone with their own cryptoasset wallet. In the same way that most people’s first experience of the internet was having an email address, which encouraged the development of e-commerce, giving everyone access to a crypto wallet could do something similar for mass adoption of blockchain technology.
Nou token launch by Barcelona piques interest
Finally, footballing powerhouse FC Barcelona, the highest earning football club in the world according to Deloitte, has partnered with fintech platform Chiliz to launch an Ethereum-based token to use on the football fan app, Socios. Following in the footsteps of Juventus and Paris Saint Germain, the token will be given to fans to reward their participation with the app, which they can then spend on various products or use to pay for event tickets.
Unlike their football team, Barcelona’s token is unlikely to set the world alight, although it is worth noting that it is the latest in a line of sports teams looking into how they can use blockchain technology to enhance their fan proposition.