24th Dec 2020

Cryptos to Watch in 2021

2020 may have been a bad year for many, but the opposite was true for Cryptocurrencies. The total market cap of all currencies tracked by Coin Market Cap rose from more than $195 billion in January to more than $546 billion. This happened as the value of top currencies like Bitcoin, Ethereum, and Ripple rose by ~150%, ~325%, and ~200%, respectively. Other smaller currencies like Tether, Polkadot, and Binance Coin also rallied. Let us look at the top cryptos to watch in 2021.
Bitcoin had an eventful year that saw it test its all-time high of more than $19,800. This pushed its total market cap to more than $350 billion. 
Several factors contributed to the Bitcoin price rally. In the United States, the Fed lowered interest rates and started its biggest quantitative easing program. That helped push the US dollar to the lowest level since 2018. 

Bitcoin also rallied because of the halving event that took place in May. This process led to a relatively high scarcity in Bitcoins, which is a positive thing for prices. Further, the increased adoption of the currency by companies and institutional investors boosted its demand. Some of the prominent firms that invested in Bitcoin in 2020 were Square, MicroStrategy, and PayPal. 

In 2021, Bitcoin will be the cryptocurrency to watch considering that it has thrived during the pandemic. Technically, the price is at the same level as its 2017 high, which is acting as an important resistance. A strong break above this level will increase the possibility of the currency rising above $20,000.

Bitcoin price weekly chart:
Ethereum had a great year, which saw its market cap soar to more than $50 billion. In addition to low interest rates and a weaker dollar, ETH had other catalysts as well. The biggest was the rise of Decentralized Finance (DeFi), which is a technology that helps people build financial companies.

In 2020, the total amount locked in the DeFi network rose from less than a billion dollars to more than $14 billion. This was important for ETH because most of the biggest projects in DeFi were built using Ethereum’s network. This includes popular projects like Maker, WBTC, Compound, and Uniswap, among others. 

Biggest DeFi projects:
In addition, the Ethereum network went through the phase 0 of the multi-year ETH 2.0. Once completed, it will shift Ethereum from a proof-of-work protocol to a proof of stake. 
In 2021, ETH will be a key digital currency to watch for three main reasons. First, as the second-biggest currency, traders will look at its inflows. Second, traders will keep a watch on the DeFi industry to see whether it will continue growing. Third, the price will also react to the next phase of ETH 2.0.

If the price manages to move above the YTD high of $635, the next resistance will be at $700 followed by the April 2018 high of $827.

ETHUSD weekly chart:
XRP had a mixed year in 2020. In total, the currency rose by more than 175% and reached a high of 0.9185. This happened after the currency managed to move above the resistance level of 0.3325 in November. 

The rally in XRP came at a time when Ripple struggled to find more banking partners partly because of the Covid-19 pandemic. Ripple also continued its conflict with US regulators who recognize XRP as a security. As a result, the company announced that it was considering moving its headquarters to London. 

Still, XRP’s rally was mostly in line with the performance of other currencies. Since XRP is usually cheaper than BTC and ETH, most traders bought it to realize more gains. 
In 2021, XRP will possibly react to the action in the major currencies like BTC and ETH. If they continue rising, the currency will possibly follow the trend too and move about $1. The currency will also react to any partnerships that Ripple makes to boost international money transfers.

XRP 2020 price action:
Bitcoin Cash had a difficult year in 2020. The price started by soaring 172% to $497 in February. As the Covid pandemic started, the currency crashed to the year-to-date low of $140 in March. Since then, the price has remained between the support of $200 and the resistance of $373. 

There was no major news about BCH during the year. The main event happened in November when the network went through a hard fork, which produced Bitcoin ABC. The impact of the hard fork was that it led to a loss of confidence among the participants. It also led to a major attack by an anonymous group known as Voluntarism. 

In 2021, BCH will continue being an underdog in the digital world. Still, the key levels to watch will be the support at $200 and the resistance at $373. A break below the support may increase the possibility of more declines.

BCH 2020 price action:
Cryptocurrencies in general had a successful year as low interest rates and unlimited money-printing pushed more participants to risky assets. There is a possibility that this trend will continue in 2021 since the macro conditions will not have significant changes. However, the currencies will continue being volatile especially in the first quarter due to portfolio rebalancing.
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