The first half of this abnormal year 2020 was hard for the crypto market as well. The coronavirus itself can do nothing to digital money because they do not exist in reality but emotions influence crypto trading no less than the fiat market. In January-June this year, the sum withdrawn from the crypto market amounted to almost 2 billion USD – this is almost 200% more than during the same period last year. As we see, cryptocurrency prospects to become a safe-haven asset have failed but what if they have other advantages?
The stock market slump in March that happened due to the global quarantine did not bring the digital quotations down. After the BTC and altcoin rates fell to the low, buyers returned to the crypto market. Now the latter is aiming at long-term goals because it is clear that world economies will not restore at a split second – this means that we need to look for opportunities to make money or at least stay afloat in some other universe. In the second half of the year, we see some prospects for cryptocurrencies as the market may offer something.
ETH: the 2.0 version must be a bomb
For the last several months, the crypto world has been waiting for an important event for the cryptocurrency market prospects, which is the launch of the 2.0 version of the Ethereum network by the Ethereum Foundation. This is the most important and promising foothold for the ETH that it has not yet fully used. The company remains silent about the date of full-scale tests but promises the start just one of these days. Today, the developers suggest that the users should find weak spots in a very limited version of the network – hack the blockchain, damage blocks, etc., i.e. find as many vulnerable spots as possible. For finding them, the company offers a reward of 5000 USD.
This means that testing is on but not on a full scale. Hence, the Ethereum 2.0 is still under development.
The test version of the network may easily be launched this summer, and if the expectations are met the future of the Ethereum will be bright.
The point is expectations. Ethereum 2.0 is expected to solve the scalability problem. Why is it important? Solving the problem will decrease the calculation chain by several links and thus speeds up the process. The speed of calculations has always the key to victory. The quicker one wins the race. Currently, the average speed of the Ethereum network is 15 transactions a second but if the scalability problem is solved, it may reach 1000 transactions a second. None of the large crypto companies has solved it yet but Ethereum has promised an optimal solution many times.
Earlier, a derivative protocol Synthetix and a research group Optimism united to test up-to-date scalability technologies in almost-real conditions. Or, at least, the Ethereum Foundation announced this collaboration. In the framework of this project, they also launch the Synthetix Exchange platform meant for issuing and trading synthetic assets. It must be based on the Optimistic Virtual Machine, which is the second step in solving the scalability problem. All in all, things are quite complicated technically and conceptually but this is the trick.
Apart from the scalability issue, Ethereum 2.0 will solve several other long-waiting problems. For example, it will implement the Proof-of-Stake algorithm that will allow having a passive income of about 3.2% annually. Moreover, Ethereum 2.0 will improve confidentiality and security.
All in all, the 2.0 version must be something completely new and unique. If it meets expectations, the ETH will have a long-term iron-cast foothold in the second half of the year.
BTC: needs China to be ok
The probability of a new wave of the coronavirus does not scare crypto investors as much as possible consequences. Long-term investors are focusing their attention on Asia, and the reason is simple: China concentrates a large number of mining farms and plants producing equipment for mining. The share of Chinese miners in miners’ community is still very large. Risk of a new virus – or a new version of an old one – may lead to the closing of mining farms in China. The good news is that such enterprises work quite autonomously, which means they need really grave reasons to close, and there is no such news now.
Apart from bright speculative factors that are mostly theoretical, the market has no other reasons for the BTC to grow.
Every other day we hear the news about either hacking wallets or huge transactions. Nonetheless, this is not what could push the leading cryptocurrency in this or that direction.
What could become a catalyst to drive cryptocurrency prospects? Say, the decision of the SEC about the status of the cryptocurrency – whether it is a currency or an asset. Then the main US banks would include the BTC in the list of currencies available for transactions. As you know, the closer digital money is to real life, the better because more potential users will have access to cryptocurrencies.
However, with the pandemics and quarantine measures the issue of the BTC status and the decision of the SEC has lost its importance. The regulator might return to work a bit later but hardly before the fourth quarter.
The halving in the BTC network that was carried out in spring, failed to raise the rate of the leading cryptocurrency. On the one hand, it had been expected and accounted for by the BTC quotations; on the other hand, it mixed up with the pandemics, and the effect was somewhat diluted.
If the fight against the coronavirus all over the world turns out successful, and the planet avoids the second wave of the coronavirus, the BTC rate may have a chance to grow to 11000-12500 USD until the end of the year. Conversely, if the world drowns in the new series of diseases, the BTC rate may start falling as fast as the S&P 500 may fall. The times of sales are the best to see a correlation between the BTC and the S&P 500.
Efficacy: the leaders are the same
At the end of the first half of the year, the top-3 leading cryptocurrencies are quite expected: these are the BTC, ETH, and Cardano. The latter grew in price by 178%, while the BTC – by 44% only.
The rating of leaders might remain the same in the second half of the year. The ETH may have an impulse of growth thanks to a fundamental driver, while the other two will either move in the overall market direction or work off some inner drivers.
Regarding cryptocurrencies prospects for the rest of 2020, a lot will depend on the situation and news releases. Whether cryptocurrencies will be able to gain a foothold as the same means of payment as traditional fiat currencies, we will find out in the near future. This factor can give a powerful impetus to the development of the cryptocurrency market. For now, you just need to keep your finger on the pulse and watch what is happening in the world.