Investors piled into cryptocurrencies in November’s volatile market
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Investors flooded into all types of cryptocurrency during November, reversing October’s trend where they abandoned all bar market leader Bitcoin which has continued its reign as the number one crypto asset.
Many crypto investors jumped into the market during November, as the price of Bitcoin rallied to almost reach its $US20,000 all-time high of late 2017.
“Bitcoin exploded in November, smashing through resistance level after resistance level, with only minor and relatively predictable retracements,” said Simon Peters, market analyst and crypto expert at trading platform eToro.
Bitcoin underwent a price correction in late November, losing $US2,000 in days to bottom at $US17,000 ($22,880) on Saturday.
But, Bitcoin’s price has revived this week and is back to $US19,500 ($26,180), Friday, as institutions and hedge funds join retail investors.
“Despite obvious excitement from retail investors, the price rise we have seen in Bitcoin is largely due to interest from institutional investors driving demand and a potential increase in adoption through payment platforms such as PayPal,” said Peters.
Cryptocurrency trading is becoming a worldwide phenomenon, with retail investors in India signing up to crypto trading platforms.
India-based cryptocurrency trading platforms are seeing an influx of interest from retail investors, with around $US20m worth of cryptocurrency changing hands each day, according to reports.
Bitcoin is gathering demand from a range of investment sources ranging from retail investors, traders to institutions and hedge funds.
“We are seeing some institutional buyers pick up large amounts fairly frequently, so the others will also be seeing that [and asking] where are they getting the coins from?” Swissquote Bank’s head of digital assets, Chris Thomas, told Coindesk.
Some analysts have advanced the case that Bitcoin could cross the $US30,000 mark by the middle of next year.
“Bitcoin will fly past the all-time high very soon and I would be surprised if we do not see a $US30,000 Bitcoin before summer [in the northern hemisphere],” crypto trader, Henrik Kugelberg, told Coindesk.
Other less publicised cryptocurrencies are starting to trade higher on the coat-tails of Bitcoin’s rally.
Ethereum is sometimes termed digital silver and Bitcoin is referred to as digital gold.
“With regard to Ethereum and Bitcoin, we strongly believe that Bitcoin is the overall market driver,” crypto trading firm DV Chain’s head of institutional sales, Michael Rabkin, told Coindesk.
“Bitcoin has been the focal point for much of the crypto community, but altcoins are also making waves as investors look to alternative crypto assets to diversify and make gains elsewhere,” said eToro’s Peters.
Cryptocurrency received a boost this week with US credit card company Visa linking its global payments system to a tech company’s cryptocurrency software.
Circle Internet Financial has developed a digital currency, US Dollar Coin, which is on the blockchain of cryptocurrency Ethereum.
Visa business customers will be able to use Circle’s software to send and receive international USDC payments that can be converted into non-US currency and spend this money at Visa merchants.
In development is a Visa credit card to allow customers to carry out transactions in USDC, believed to be the first of its kind.
Meanwhile, US investment research firm Bernstein Research’s co-head of portfolio strategy has changed his mind on crypto assets.
Inigo Fraser-Jenkins said in a client note this week that Bitcoin does have a role in client investment portfolios.
“The greater role that governments will likely play in economies makes cryptos potentially more appealing,” he said.
Crypto currency investors increased their trading positions in Bitcoin by 220 per cent in November, after a smaller 16 per cent rise in October, according to market data from eToro.
Stepping into second place in terms of investor interest was digital currency XRP which is popular among banks and institutions.
“The token rose from 24c at the start of November to 66c at the end of it. XRP’s increase in month-on-month trades is entirely logical in the context of November’s price rise,” said Peters.
The XRP token went ballistic in November, notching up a 1,151 per cent increase in trading volumes compared with October.
Stellar saw the second largest month-on-month trading volume increase at 859 per cent, as investors reacted positively to its upgrades designed to widen its appeal among crypto users, said eToro.
Ethereum was the third most traded crypto on eToro in November, rising 279 per cent on-month, while it underwent upgrades.
Cardano put on a large increase in volumes in November, as investor interest broadened beyond Bitcoin to other digital currencies.
Trading in some cryptocurrencies fell by as much as 55 per cent during October, as in the case of Tron, despite delivering strong returns this year.
Tron was back up in November, its volumes rising 170 per cent from October levels.
“Despite a steady dip in volatility levels, there is still fluctuations on a day-to-day basis,” said eToro’s Peters.
One cryptocurrency — Neo — dropped out of the top 10 most-traded cryptocurrencies in November after reaching the number seven spot in October.