• en

Cryptomarket. Interim results of 2020 and forecasts

Cryptomarket. Interim results of 2020 and forecasts

During the last seven months, the currency and cryptocurrency markets have gone through many changes.

From February to mid-July of 2020, investors were looking for safe investments, such as the benchmark of the US Treasury, the dollar, which experienced a historic drop in profitability to below 1% on March 3, 2020.

However, similar to the conditions during the financial crisis of 2008-2009, the dollar had still become the preferred currency for investors, which strengthened its role as the dominant global reserve currency.

Like all other asset classes, the cryptocurrency market first suffered a defeat. The reason for this is the fact that the coronavirus is primarily a liquidity crisis.

However, the economic crisis caused by the closure of businesses, which led to a drop in the value of all major assets in the traditional market, forced people to reconsider their attitude towards investing in cryptocurrencies.

For example, in June, the value of bitcoin increased from $6,800 to $9,800 since the beginning of the year. Note that not many classic assets can boast of such results especially during a pandemic.

The growth of exchange transactions in the cryptocurrency market

During the pandemic, there has also been a significant increase in interest in the cryptocurrency market.

The number of transactions in US dollars increased from February to July of 2020. The chart below shows the increase in transactions since mid-July of 2020.

The popularity of cryptocurrencies. How the business reacted

The business started introducing cryptocurrency into payments more actively. For example, in July, streaming service Twitch announced a 10% discount1 for subscribers who pay for subscriptions using cryptocurrency.

According to Bill Zielke1, Chief Marketing Officer at BitPay, a crypto payment processing system, “Twitch is the first major seller to launch this trend.” Note that Twitch is not the only gaming site and streaming service that offers cryptocurrency support.

“A recent study by Wipro found that 75% of CEOs now see blockchain as a strategic priority in 2020,” said Buck Flannigan, Vice President of Global Partners at Fluree2.

Cryptocurrencies in investments

The main advantage of cryptocurrency is its low correlation compared to traditional and alternative asset classes, which makes it an ideal portfolio diversifier.

According to a recent study by the Frankfurt School of Finance and Management, the allocation of 1% to 5% of investment in cryptocurrencies to a traditional portfolio not only creates additional profitability but also significantly increases the Sharpe ratio, which is the most famous measure for assessing the risk of return.

Compared to the stock and commodity markets, it is still the best performing asset class of 2020. Through the monetary policies of the central banks of the European Union, the United States, and Japan, one can see the vulnerability of the current monetary system, which is causing more and more people to lose confidence in central bank policies and money in its current format.

2020 forecasts and trends: from fiat to crypto

After going through the first half of the year, cryptocurrencies are gaining strength again.

Although it is too early to give predictions for the cryptocurrency market in statistical terms, it should be noted that many investors nowadays are considering cryptocurrencies as an alternative to traditional markets.

Despite the current volatility in the market, investing in cryptocurrencies seems reasonable. There are many electronic services for the exchange and storage of fiat money and cryptocurrency.

The trend towards the coexistence of two types of valuable assets and their active interaction is now very clearly visible. Services for converting fiat money into cryptocurrencies (and vice versa) are gaining more and more popularity.

By the way, it is the exchange services that occupy a significant share of this market.
Despite market fluctuations, the Cratos platform provides an individually customized service for each client. We use global security standards, and thanks to proprietary software, funds are always safe.

Ready to make your
smartest trade?

  • Transactions of more
    than €5.000.000
  • 1.500 active users
    including business
Start exchange