In 2021, Bitcoin and other big cryptocurrencies have seen enormous growth despite short-term volatility. If we look at April, for instance, we see Bitcoin’s price flew up to $64, 895, but then responded to the China crypto crackdown by losing more than half its value within 35 days.
In May and June, traders were anxious to sell the digital coin in the wake of China’s strong suppression, which pushed its price down so considerably so that in mid-July a Bitcoin cost less than $29,000. Another contributing factor here was tighter scrutiny of cryptos by western regulators and the sentiment that some further regulations were inevitable.
Between September and October, however, weekly inflows into Bitcoin funds jumped strikingly from $31.2 million to $121 million. One feeling analysts pointed to behind this was traders’ conviction that Bitcoin trading offered a way of achieving inflation-immunity during times when its effects were being tangibly felt by consumers.
“We had a pretty steep sell-off for Bitcoin in this summer. The price action has been a recovery from a low,” explains Sui Chung of Benchmarks. Let’s go over recent cryptocurrency trading developments and controversies and then look towards the future.
Crypto ETFs
Traders felt something monumental had happened in October when the US Securities and Exchange Commission (SEC) agreed to the first Bitcoin futures-based ETF (Exchange Traded Fund). Traders were convinced this would stimulate interest in cryptos, and so a buy-up ensued, sending the price of Bitcoin up to $64,367,14, its highest value in six months. Trader enthusiasm about this development boosted Bitcoin’s value in October by 45%.
The ProShares Bitcoin Strategy ETF saw $1 billion worth of its shares change hands on its first day on the NYSE Arca Exchange, and it closed up by 2.59% to $41.94. In fact, Crypto ETFs already existed in Canada and Europe, though Invesco gave up on its plans to form a futures-based crypto ETF.
Grayscale, on the other hand, which is the largest digital currency manager in the world, applied in November to list a fund that would track companies involved in digital currency. SEC chief Gary Gensler warned that, although it’s true that ETFs are monitored by his commission, “It’s still a highly speculative asset class and investors should understand that underneath, there is the same volatility and speculation.”
Bitcoin in India
A new crop of start-ups in India are making it possible for young clients to trade Bitcoin on their smartphones. The average user of CoinSwitch Kuber, for example, is only 25 years old and, 70% of the time, is a first-time financial trader. In only a year-and-a half, twelve million Indians have downloaded this app. Since an attempt to ban cryptos was knocked out of an Indian court in March 2020, it does not seem that the government is planning to clamp down on cryptos in the way China has.
One reason that platforms like CoinWise are enthusiastic about the increase in young clients is that they check their portfolios’ performance frequently, which gives the platform the opportunity to increase publicity of their other products. One potential drawback, however, is that they often offer scarce educational tools to ensure their customers are aware of the risk inherent in their transactions.
A rising altcoin star, Cardano has been getting plenty of attention lately thanks to several unique features. For instance, the Bitcoin network can only process seven transactions per second, while Ethereum can handle as much as 13 per second. But on Cardano, about 250 can go through. Not only that, the network is being improved through its Hydra upgrade, which may give it the power to process up to a million transaction every second.
Cardano’s closest competitor in this regard may be Solana, which can facilitate 50,000 transactions per second. One thing Ethereum excels at more than Cardano is in its smart contract suitability, but don’t count Cardano out. Their total value as of September was $96 billion, and in November they were up 1,000% year-on-year.
Wrapping Up
Considering both Bitcoin and Ether have more than doubled in value since June, and with Cardano making a name for itself in the cryptocurrency trading markets, there is plenty of volatility that is getting the attention of CFD traders.
On the other side of the coin, we all recall the recent week-long saga when frantic buying of fresh crypto Squid Game pushed up the coin’s value to almost $2,800, after which it quickly collapsed to almost nothing when its developers picked up ran off with their money. We must bear in mind Gary Gensler’s warning about the volatility of this asset.
Traders who approach the cryptocurrency market through trading CFDs work with the changes in crypto prices themselves – whether up or down – from which they receive both opportunities and risks. Before opening a deal, it is crucial that traders align themselves with a reliable, secure and experienced platform and educate themselves sufficiently about their instruments.
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