What trajectory are Bitcoin and Ethereum on right now? Read before you start to trade bitcoin with iFOREX in the form of CFDs.
A Bitcoin for Mr Xi’s Thoughts
When September arrived, things were looking wonderful for Bitcoin. BTC was up 81% to $50.188.4 from its low for the year of $27.74. By comparison Ether, the second most-popular crypto, was also on an upturn, having risen $44.97 to $3.932.07. As it happened, however, this volatile instrument trading in volatile times was dosed out another spoonful of volatility later in the month. The Peoples Bank of China barred Chinese financial institutions, internet firms, and payment companies from facilitating cryptocurrency trading, in addition to a nationwide ban on crypto mining. The PBoC made no effort to hide their intentions, announcing that the government is planning to ‘Resolutely clamp down on virtual currency speculation, and related financial activities and misbehaviour’. After the announcement, the value of a bitcoin fell by 5% and the value of Ether by 8%. Cryptos are no strangers to sudden drops in value, or to the impact of sudden decrees by the PBoC, which were also sent out in June 2021. In a market so driven by sentiment, however, the overall mood of investors must be taken into account. After the late September crackdowns, traders simply don’t know where the PBoC will stop. ‘Crypto continues to exist in a grey area of legality across the board in China’, says Market Analyst Joseph Edwards of Enigma Securities. Let’s try to paint a balanced picture of the crypto market and the factors influencing it at present. If you plan to trade bitcoin with iFOREX in the form of CFDs, this kind of info can be invaluable.
The Crash in May
The sensitivity of the crypto market was really underlined in May 2021. In April, the news was reporting the stunning success of Bitcoin in having multiplied its value six times since late 2020, and some market analysts were predicting it could climb to $100,000 in a few months’ time. But then BTC lost half of its value within the space of a couple of weeks, reaching as low as $32.458.12. Here’s what happened. In February Elon Musk announced the imminent allowance of bitcoin payments for its vehicles, and even invested $1.5 billion in the world’s biggest crypto, however in mid-May he changed his tune based on environmental concerns. There was also a blackout in Xinjiang, China, a major bitcoin mining centre, and Turkey’s central bank banned crypto purchases. If late September’s news from the PBoC gave us a touch of déjà vu, it was because China’s central bank did something very similar in May, sending out a ban on Chinese banks providing crypto-related services. All of the above came down on Bitcoin with considerable impact and Ethereum took a big hit too. Speaking of which, let’s review this crypto’s recent history.
Ethereum
Ethereum is the world’s second largest blockchain network. After sinking below $100 in value during the market meltdown of March 2020, it climbed back up to $700 by the end of the year. Before the assault in late May 2021, the crypto had begun to excel, breaking through the $3000 mark to settle at a new high. Its 325% growth for the year so far was even more impressive than bitcoin’s 95%.
August 2021 saw Ethereum get a major software upgrade, aimed at stabilizing transaction fees. The popularity of this crypto reflects a general shift in the direction of DeFi (decentralized finance), meaning toward financial transactions outside traditional banking. The Ethereum blockchain retains a place as one of the chief platforms for these transactions. One of its badges of pride is its PoS (Proof of Stake) technology, which allows it to offer better security and lessen its impact on the environment by reducing the electricity required to run the network.
What’s the verdict?
Brad Garlinghouse, CEO of Ripple, says that ‘If the Cryptocurrency market… is solving a problem, it’s going to drive some value.’ He’s not the only one who sees an unstoppable future for cryptos. On the other hand, China’s central bank is not the only body that views it as a potential threat. Jerome Powell, head of the US Federal Reserve, has said that cryptos present risks to financial security and that there is a need for tighter regulations to be placed on them. For the moment, the future of crypto is uncertain, and this kind of instability can present both opportunities and risks for CFD traders who’d like to start to trade bitcoin with iFOREX by investing in the price movements of financial instruments like cryptocurrencies. With CFDs, traders are able to ‘go long’, investing in an upswing in an instrument’s price or ‘go short’ by investing in a downturn in price, without ever owning the asset itself. Before you start to trade bitcoin with iFOREX as CFDs, take advantage of its quality educational materials and invest with knowledge and understanding.