Cryptocurrencies gain recognition as an investment asset. Apart from Bitcoin, other smaller currencies like XRP, Litecoin, and Polkadot see an uptrend too.
Bitcoin, the leading cryptocurrency has lagged, while Ethereum, the second-largest crypt is near an all-time high at $20,000. Investors usually invest in Bitcoin and Ethereum but also have a collection of other cryptocurrencies such as XRP, Lite coin, and Stellar. XRP surged almost 25%, while others like Litecoin, Cardano, Polkadot, and Stellar enjoy large gains.
Users prefer to diversify their investments as it means less risk, says Ripple CEO, Brad Garlinghouse.
XRP and Litecoin See Big Volume with Volatile Bitcoin
Bitcoin, Ethereum, XRP, Litecoin, and Chainlink are some of the biggest cryptocurrencies that enjoy a large volume. These smaller cryptocurrencies have seen a huge surge, much larger than Bitcoin. Even a small move brings a bigger percentage increase, as their market capitalization is much smaller. Chainlink, Polkadot, and Cardano are other small digital assets that are gaining recognition from users.
With the dollar weakening, investors are now trying to build their portfolio in cryptocurrencies. The shift in investments has benefitted Bitcoin. However, Bitcoin has become very volatile and puts investments at risk. Moreover, Bitcoin is at high levels, and investors are wary about investing at such high levels, while the smaller currencies are at attractive values.
Rippleâ€™s XRP has multiplied three times, attracting more customers into its fold. The digital token is however not as useful as Bitcoin or Ethereum. XRP surged almost 25%. The total value of XRP is around $30 billion.
Ethereum, the second-largest cryptocurrency, is trading much below all-time highs at $1,400, reached in 2018. It is currently trading at around $530. Ethereumâ€™s market cap has come down by 31.5%, to $60.83B from $135.58B.
Ethereum has a market capitalization of $70 billion. Though it is only one-fifth the size of Bitcoin, the digital currency is more reliable as it is used to send assets around the globe on its digital ledger, blockchain.
Litecoin, the digital currency that came in 2011, is a better version of Bitcoin as it helps in a faster transaction process than Bitcoin. The total value of Litecoin in circulation is about $6 billion.
Developing Digital Currencies
Other digital currencies like Terra, VeChain, and Compound are entering the upward rally in the cryptocurrency market. Stable coins like Paxos and Tether are showing added interest. Libra, launched by Facebook, seems to attract more investors as the younger generation comes to know more about cryptocurrencies.
Bitcoin is gaining recognition as digital gold by investors. PayPal users are allowed to use Bitcoin. It is pulling up prices of other smaller coins, Ethereum, XRP, Chainlink, and Litecoin. In 2018, when Bitcoin saw a downward sweep, other cryptocurrencies also nosedived. In these days of upward momentum, Bitcoin is pulling up the smaller cryptocurrencies.
Polkadot helps application developers create their own blockchain. It links the developers to other blockchains as one huge network. It has gained almost 85% from its beginning in August.
Cryptocurrency exchanges are vulnerable, and users are wary of them as they do not offer security guarantees and hackers misuse them. As they are prone to a security weakness, hackers manipulate them, though they do not get access to the user data. Unless regulatory bodies step in and bring in official regulations, they cannot be used by all safely as they do not provide real security advantage.
Bitcoin soared to all-time highs just below 420,000, when it surged almost 15% last week. Ethereum went up by 20% last week. The total value of Bitcoin in circulation is around $360,000. The increase in Bitcoin is the result of the weakening US dollar.
Rising inflation is another reason for the strengthening cryptocurrency, especially as interest rates remain low.
Bitcoin, the first cryptocurrency to go mainstream, has increased interest in other cryptocurrencies too. Â Currently, there are more than 2,000 types of cryptocurrencies developed.
Bitcoin has outperformed other major assets like the Dow Jones Industrial Average. Bitcoin is on a continuous downtrend for the past three days. It dropped to $17,630, though it bounced back later. It faces tough resistance at $19,000 to $20,000 over the last few weeks. Bitcoin rose to $19,464 on 3 December, before sliding downwards. However, experts feel Bitcoin may surge past resistance $20,000 levels soon.
Singapore has become a global financial hub that expects digital currencies to reshape the market. The DBS Digital Exchange has announced a full-service digital exchange to facilitate spot exchanges. It supports four currencies, which are the Singapore dollar, Hong Kong dollar, the US dollar, and the Japanese yen, say authorities of DBS bank.
Experts at JPMorgan investment banking say that investors now prefer Bitcoin, especially the younger generation. The adoption of Bitcoin may decrease their enthusiasm for gold. About $7 billion investment has gone out of goldâ€™s ETF since October.
- US Dollar Bounces from Thursdayâ€™s Lows on Good Economic Data - Jan 25, 2021
- Binance Burns 3.6 Million Tokens in 14th Quarterly BNB Burn - Jan 22, 2021
- EUR/USD Keeps Focus on ECB Meeting on Thursday, 21 Jan - Jan 20, 2021