This year the popularity of digital money is growing, and the DeFi sector resembles the ICO of 2017. Experts are confident that cryptocurrencies are likely to rise in price in the next three months, but you should not wait for a massive update of historical highs
In mid-September 2017, Bitcoin was traded at $ 3,500, Ethereum — at $ 250, and XRP — at $ 0.18. Two months later, in December 2017, BTC set a historical maximum value of $ 20,000, and in January of the following year, ETH and XRP reached $ 1,400 and $ 3.71, respectively. In a matter of weeks, many altcoins showed thousands of percent growth, and the market turned into a real financial bubble that burst as quickly as it got formed.
Сryptocurrencies are likely to rise in price
This year there are all the prerequisites for such a scenario to repeat. Cryptocurrencies are gaining attention on the background of geopolitical uncertainty and depreciation of national currencies as a result of unprecedented stimulating measures to support the economy. The Federal Reserve issued several trillion dollars, proving the value of limited-emission assets like Bitcoin or gold.
In 2017, the main pushing force was the fear of lost profits, investors bought up coins in order to make money on the growth of their value. Now the interest in cryptocurrencies has quite fundamental reasons. After Bitcoin falling to $ 3,800 in March, its price quickly recovered to its previous level of $ 10,000 and in August renewed its annual maximum at $ 12,400.
The probability of the annual maximum to be renewed by the end of 2020 is quite high, however, you should not expect a bubble to appear in the market and a multiple growth to happen in the remaining months. There is currently no hype around the industry and no demand from a very large number of retail investors.
To start a new wave of parabolic growth in the crypto market, an influx of institutional investors is needed. For this, conditions must emerge that currently do not exist and they are unlikely to appear before the end of 2020.
Bitcoin to break new yearly highs
Experts do not expect a significant increase in prices until the end of 2020, however, I believe that we will see new annual highs. BTC could reach $ 14,000, ETH could rise to $ 550 by the end of the year, growth can also be expected in ONT, LTC and BNB.
To have prospects for further growth, bitcoin needs to overcome the psychological mark of $ 14,000. There will most likely not be an abnormal rise in cryptocurrency prices at the end of 2020, this may happen in the spring of 2021 — a year after the halving.
In 2017, the ICO sphere also influenced the popularity of the cryptocurrency market. It has been an extremely popular way to raise funding for startups. Many of them managed to raise money with only an idea, without a minimum viable product. This had a positive effect on the Ethereum rate, which peaked at $ 1400, and after the failure of the ICO fell by more than 90%.
DeFi’s impact on crypto industry
Now the field of decentralized finance has replaced the initial offerings of tokens. It is also directly related to the Ethereum blockchain, and is extremely volatile. For example, on September 14, the coin of the DeFi platform Yieldfarming insure SAFE rose in price by more than 500% per day. And this happened after one tweet from the head of another, the most popular project at the moment, Yearn Finance. Its YFI token was issued on July 18 and grew in price by more than 100,000% in 2 months.
However, the DeFi sphere is still very far from the popularity of ICOs. Google Trends data show that decentralized finance is not interesting to a wide range of users. While in 2017, information about the initial offerings of tokens was actively searched on the network, at first they had a reputation for easy money, which quickly turned into a failure.
There are certain chances for significant growth in the DeFi sector by the end of the year, however, even here everything will depend on the state of the entire crypto market. It is unlikely for DeFi to grow significantly if the total market capitalization does not rise, and the leading digital currencies and tokens remain unchanged.
The sharp and multiple growth of the market may be affected by the arrival of institutional investors, but this is hardly possible until the end of 2020.