If you’re used to following cryptocurrency news, you’ll likely have heard about the incredible performance of Bitcoin over the past few months. The price of which has now smashed through the $53,000 barrier. This figure is the latest in an incredible uptick in value, which has caused its price gain to rise by 81% during this year.
While there are many factors to which we can attribute Bitcoin’s successes, the words of Tesla founder Elon Musk in favour of the currency, branding it, amongst other things “less dumb” than owning cash and his company’s $1.5bn purchase of the cryptocurrency seem to have had the largest effect.
The overall success of Bitcoin’s recent meteoric rise has caused a ripple effect across the cryptocurrency market. Almost every cryptocurrency has experienced a prolonged rise over the previous seven days. Only the smaller currencies of 0x and Kyber Network have experienced losses. Dash is looking a great prospect following on the back of their 2020 282% trade volume increase. This previous week, they have added a sturdy 68.18% to their price – a figure some 31% higher than Bitcoin Cash increase. Ethereum has also hit a record high with a peak of $1,938 on Thursday 18th February.
To understand the effect Bitcoin has had on their competitors, it is important to understand how one basic market strategy could explain the rise in a simplified way. A positive bit of news comes out about a product, in this case, Bitcoin. Buyers purchase the product based on the good news. The price rises. It continues to rise to such an extent that it no longer becomes an affordable risk for the majority of people. They search for an alternative, do their research to try and find the ‘next Bitcoin’ in the hope of it paying off. Thus, market sentiment is that similar currencies are more affordable and worth the risk. These are purchased in the same way as the first currency. This causes prices to rise for the other crypto and alt currencies, bar those that are viewed by the market as higher risk, in this case, 0x and Kyber Network.
In the very near future we believe we’re unlikely to see any dramatic downfalls in the cryptocurrency market. Cryptocurrency is currently receiving media attention like never before, thanks to the recent RobinHood situation and Tesla’s interest in Bitcoin. Ethereum has also experienced great fortunes in the previous months, with some citing the Chicago Mercantile Exchange’s launch of its futures as a reason to consider the cryptocurrency undervalued. However, like most markets cryptocurrency is cyclical. A cautious eye should always be on the potential for legislation changes throughout the world. However, at the moment it’s full steam ahead for digital currency.