Bitcoin powers on ahead, lifting other digital currencies like Ethereum and XRP higher. Bitcoin rally has pulled other smaller coins higher by about 10% last week.
Ethereum, which is known to move in the same direction as Bitcoin, shows momentum with rising demand. Known as the second-largest cryptocurrency in terms of market capitalization, Ethereum has moved up by 25% over the last three days. Over a period of two years, it has gained more than 7%.
Ethereum 2.0 Increases along with Bitcoin
Both Ethereum and XRP move in tandem to the movement in Bitcoin. However, they are more volatile than Bitcoin, which is considered the original currency. There is growing interest in the cryptocurrency, which is keeping the markets volatile and highly in demand.
In 2017, when Bitcoin soared to lifetime highs, other major cryptocurrencies were not affected much. It was only after a month, in January 2018, that Ether saw an uphill move. The pattern is similar in 2020. Ether is seeing an upward momentum only after the Bitcoin rallied beyond $15,000. Experts say that an outflow from the Bitcoin market into Ethereum will boost the market.
Some experts believe that the ETH has increased with Decentralized Finance (DeFi) usage and network usage. Users are earning a return on their investment, which is pulling up the ETH prices. The launch of the ETH 2.0 is an important cause for the Ethereum blockchain run.
Ethereum 2.0 is an upgrade to its blockchain network, by which its economic activity usage has increased. It has become quicker and more secure by its upgrade. More players are entering the Ethereum network. After Bitcoin, Ethereum is the next biggest beneficiary of the inflow from investors in the digital space. This movement will continue to attract more investors, say experts.
XRP is the third-largest cryptocurrency, which has risen by a record 75% over the last three days. It has moved up by 22% over two years. Ripple is another currency that is priced higher.
Demand for Cryptocurrencies on the Increase
The demand for risk-on assets caused by the rising pandemic has increased the demand for cryptocurrencies like Bitcoin, Ethereum, XRP, and Ripple. Its resistance to inflation has attracted investors towards the cryptocurrency. Bitcoin is up by 160% this year.
Ethereum, which saw a record of $1,500 in January 2018, moved up to $600 in November 2020. As traders expected, ETH has pulled back after reaching $620 on Thursday. If ETC rallies again, it may move towards $900 or even higher, say experts. When Bitcoin saw a huge rally towards the $20K price, investors betted on a similar rally in the ETH price, which drove prices higher, say experts. Ethereum has received a huge inflow of investments in the digital asset space say, investors.
Bitcoin and Ethereum Unable to Cross Strong Resistances
Bitcoin was unable to cross its all-time high of $19,666 on Thursday. It moved to $19,474 before losing momentum and drifted lower. There is a similar movement in Ethereum, which has fallen after the rally. The rally and the fall in ETH are caused by the BTH movement, say most analysts.
After touching levels of $620 this week, ETH has moved lower. In the last 24 hours, the price of ETH has come down almost 16.5%, while Bitcoin was down 11%.
BTC moved past its various resistance levels at $13,000, $15,000 and $18,000 easily. However, it was not able to gather further steam after reaching $19,500 and slipped to almost $18,800 on Thursday, 26 November 2020.
Year-End Halts Upside Momentum
Though the cryptocurrencies are set for a positive move in the long term, traders do not expect much momentum this year as it is closer to the year-end, with Christmas and New Year ahead. Investors usually reduce exposure their exposure to cryptocurrencies and take their profits for the year-end.
With the network attracting more users, traffic is improving on the network, and transactions are on the increase. The downswing on Thursday is just a temporary one that will attract more investors into the network, say experts. The outlook for the BTH and ETH will remain positive for the long-term.
The pandemic has made big countries like the US, UK, and the EU to pump in a lot of capital to support their ailing economies through stimulus packages. The national debt is on the increase, which will affect the US Dollar. It will bring an increase in the number of users in the cryptocurrencies, point out experts.