Bitcoin Attractive In Both Short And Long Term

Bitcoin had a positive run lately, touching and surpassing the $18,000 level in multiple instances.

By Simon Peters, analyst, eToro and David Derhy, analyst, eToro

If you had said to me just a few weeks ago that we would soon be in touching distance of $20,000 – bitcoin’s all-time high – I may have voiced some doubts. Yet here we are, hovering around the $18,000 level, just $2,000 away from that legendary $20k mark. That’s a movement that could easily occur in just a few hours.

Therefore, it is not out of the question that we could see a new all-time high before 2021. My bullishness hasn’t changed in terms of where I see bitcoin going in the long term, but I am conscious of momentum and would warn that the market does look a touch overbought right now. It is possible that at $20,000 we could see some investors take profits (or if they bought in 2017, cut losses and break even) and this could see the price of bitcoin enter a short period of consolidation. Given that the on-chain unrealised profit/loss data currently shows that the majority of bitcoin addresses are in profit, it’s not audacious to expect some selling at $20,000 or even slightly before.

I highlighted in comments last week that ‘this time is different’ and I’m still of that opinion, which is why I see bitcoin as a good long-term investment opportunity. The institutional investment coming into crypto, not just from hedge funds, HNWI and family offices but from pension funds too, is a long-term tailwind that will continue irrespective of the short- to medium-term bitcoin price fluctuations.

XRP excites you and me

The standout performer in the altcoin space of late has been XRP. Currently sitting at $0.462, it has risen from $0.269 last Monday. Alt coins in general are benefiting from an uptick in bitcoin price and also the upcoming snapshot of spark tokens from the Flare Network on the XRP ledger would have had an influence on this XRP’s gain.

In 2017, XRP was one of the other cryptoassets to benefit from the extraordinary bitcoin bull run, hitting a high of $3.84 on 4th January. No doubt investors, seeing the positive moves that bitcoin has made this year, are expecting XRP to replicate its performance from late 2017 and early 2018 – although I doubt they’ll be wishing to see the subsequent end-of-January plunge repeated in the same manner.

Battle of the Dapp platforms

One of the key battles I’m seeing play out over the next few years is the fight to be the leading platform for decentralised applications, with Cardano and Ethereum currently going head-to-head. Whilst in my opinion Ethereum has the upper hand at the moment, I don’t think its position as market leader is necessarily a given. Cardano has arguably been taking leaps in recent times such as upgrading to the Shelley mainet and now work on Goguen, its next phase, whilst Ethereum takes steps in its transition to 2.0.

For the Ethereum 2.0 Phase 0 – beacon chain genesis to occur, there needs to be 16,384 validators, each with 32 ETH staked. At the current pace I really can’t see this happening before the planned launch date of 1st December, especially as the target needs to be met seven days before (24th November 2020). That’s tomorrow, and the current amount of ethereum staked is only at 54% of the target. So why hasn’t enough ETH been staked yet? Perhaps the majority are waiting on the sidelines and once the beacon chain is secure and stable look to participate then. But we find ourselves in a catch-22 because the deposit contract cannot launch until enough ETH has been staked.

The two inevitabilities in life: Taxes and Bitcoin forks

It was a monumental week for the Bitcoin Cash community, which saw Bitcoin Cash fork in two: Bitcoin Cash Node (BCHN) and Bitcoin Cash ABC (BCHA).

The key issue for the two development teams was whether to implement an 8% tax on the block rewards provided to miners. The BCHA team was for, the BCHN against.

Going forward, it will be interesting to see which cryptoasset is regarded as the ‘original’ Bitcoin Cash. Decrypt reports that most exchanges will be focusing on the crypto with the majority of the hashpower, which seems to be BCHN at the time of writing.