Welcome back to our weekly newsletter, where we try and provide some timely insight into the ever-changing world of crypto. We’re less than one week into 2021 and we’ve already had more activity than many other asset classes see in a year. Bitcoin has continued to blast through all-time highs before a dip in price yesterday, whilst Ethereum has been chasing its own high. The S&P 500 struggled midweek, before recovering and finishing on 3,803. The FTSE 100 surged midweek as optimism about vaccinations and the finalization of the US election took hold, before tempering off amid fears of inflated valuations. 

Image Source: Pixabay

Simon Peters

Bitcoin’s new year’s resolution: Steal the headlines 

The start of 2021 has been nothing short of extraordinary. The steady rise in the second half of 2020 made it very likely that we’d reach a new all-time high by the new year, but the price action since then has been phenomenal. Despite the dip yesterday, where bitcoin fell from $41,000 to $34,000, we are still in a healthy position. Not only are we continuing to see institutional investment, but bitcoin being held on exchanges is decreasing as investors move their tokens to wallets, with Glassnode data showing an increasing level of illiquid bitcoin as more and more investors hodl.  

I believe we can look to the $70,000-90,000 range as a price target for the end of 2021. There will inevitably be bumps along the road, and no doubt a number of retracements will occur, but there are also gains still to be had. 

David Derhy

Ethereum hot on the heels of ATH 

Whilst bitcoin has been taking all the headlines in the mainstream press, Ethereum also displayed some impressive price movement at the tail end of 2020. This has continued, with the cryptoasset fast approaching its all-time high of $1,400. 

Ethereum saw an exceptional rise, having started last week just above $1,000. Investors in bitcoin may be looking to take some profits and reallocate, and Ethereum could be a target. 

In the short term, there is rightly some noise about the upcoming SEC decision on stablecoins and whether it should bring such assets under its regulation. Such a move would send shockwaves through the crypto community, given the widespread dependency on USDT when trading in and out of crypto. 

However, in the long term, I believe the prospects for Ethereum are good, and a target of $2,500 is reasonable given the gains we have already seen and current price momentum. 

Simon Peters

Goguen, Goguen, gone

For Cardano, 2020 saw the well-received Shelley upgrade. For 2021, the Goguen upgrades are in developer IOHK’s sights. Goguen will bring the development and incorporation of smart contracts and decentralized apps on the platform. This, as the Shelley upgrades did last year, could have a positive impact on price, especially if the upgrades are as equally well-received by retail investors and we see developers port projects from Ethereum to Cardano. 

But a question remains on the possibility of the mutual existence of multiple smart contract platforms. Ethereum has continued to see issues with gas prices but when this is inevitably resolved, where does that leave other proof-of-stake dapp platforms? 

Whilst projects such as Chainlink have already highlighted they are looking to expand beyond just the Ethereum blockchain, it may be that the majority of app developers wish to focus on just one. Ethereum’s backers are confident, and the vast amount of eth staked last year indicates that there is a huge following and support for the platform. 

The OCC’s decision may be more significant than initially thought 

In a significant move, the US regulator the Office of the Comptroller of the Currency (OCC) ruled that banks can use stablecoins in payments and services. This could end up being the biggest on-ramp move in crypto so far. It’s not beyond the realms of imagination that we might see banks providing their customers with the ability to convert fiat currency to a stablecoin in their personal banking app. Being able to convert to, say, USDC with minimal fees would then give consumers the opportunity to move that USDC to a wallet or exchange and trade it for other cryptoassets within the ecosystem. 

Depending on the appetite from banks, this could be monumental. 

There is much to look forward to in 2021, so strap in for the ride and prepare yourselves as crypto continues to push into the mainstream.