What will happen to BTC and ETH in 2021?

In recent weeks, the crypto world has been fixated on one topic: the price of bitcoin. The price of the popular cryptocurrency is rising after Bitcoin was able to shake off its previous all-time high on December 16. But it's not just bitcoin that investors are focusing on. Ethereum, Poca, Litecoin and many smaller projects are all likely to have made strong profits in the past few weeks.

Bitcoin -- These are the reasons for the current rally

In the midst of a strong rally, bitcoin has again hit an all-time high of $34,700. It wasn't until December 16 that the popular cryptocurrency broke through its all-time high since 2017. However, the fundamentals have changed radically from December 2017, as Bitcoin is now no longer seen as a future payment method, but as a digital store of value. In our view, the following facts favor bitcoin's rally:

Institutional Investor Interest in Bitcoin:Large companies such as Square Inc, Mass Mutual and MicroStrategy have made significant purchases of bitcoin, increasing public awareness of the currency.

Increased adaptability:In terms of adaptability, a lot has happened in recent years. However, PayPal's role is particularly noteworthy. U.S. customers of payment providers can already buy bitcoin through the app. Square's U.S. customers have been able to buy and sell bitcoin for some time through the popular Cashapp app.

Business environment:Another factor that we believe is driving Bitcoin's growing importance is economic development. Corona continues to dominate economic activity, with central banks issuing trillions of dollars in new capital. To hedge against the coming wave of inflation, investors are fleeing into assets that hold their value, such as real estate, stocks, and cryptocurrencies.

The scarcity of bitcoin:In addition, Bitcoin's scarcity may also play a role in the current price rise. In May 2020, Bitcoin's earnings halved. As a result, fewer and fewer Bitcoins are coming to market. As demand increases, that means the price of bitcoin will go up. PLANB's inventory-to-flow model provides a good visualization.

rightBTCThe short - term attack failed

For many investors, bitcoin's current rally has come as a surprise. Some experts even expect the price to close at $30,000. As a result, many investors have taken short positions. On January 2, news from the Bitcoin Whale suggested that sell orders of more than 150 BTC could break the current momentum and observed a short-term consolidation. In a matter of hours, the price of Bitcoin dropped from $33,000 to $30,000.

However, this correction did not last, as within 24 hours, Bitcoin reached an all-time high. Demand for Coinbase is also unusually high. Traders, meanwhile, are using Binance futures to bet against bitcoin. The result is a bear squeeze.

So short sellers have to realize that betting against bitcoin is really going to end in pain. Overall, short sellers haven't had much luck with their short positions over the past 10 months.

Are we about to see another shanzhai backlash?

However, while Bitcoin is currently experiencing a strong price fluctuation, the head of the copycat currency remains relatively calm. Previously, only Ripple was able to convince investors with a strong price rise - but the SEC complaint pushed Ripple back to its original level. 

Now, however, something seems to be changing in shanzhai. The price action on Ethereum, for example, is worth highlighting. It's the first time since May 2018 that the price of Ethereum has surpassed $800. At the same time, it even broke through the $900 price mark. Some traders are now assuming Ethereum outperformed Bitcoin in January. In addition,Ethereum may be on the verge of a new bull cycle, as the CME plans to launch Ethereum futures in February.In addition, it is now clear that the number of people buying Ethereum is hitting a new high, much higher than in 2018.

However, in addition to Ethereum, Poca has also attracted investor interest in the past few days. The reason is that prices have increased by more than 80% in just seven days. After a long period of stagnation in bitcoin prices, investors now recognize the project's potential. Poca could become one of the leading Defi blockchains and play a leading role as a collateral coin. Currently, more than 63 percent of DOT products are in the mortgage wallet, which is a clear statement by market participants about personal synchronization. 

Finally, the price of Litecoin has also shown a positive trend. "Digital silver" is already among the top 10 cryptocurrencies.Litecoin topped $150, the first time it reached a price level that was last seen in May 2018. Based on returns, Litecoin doesn't have to hide from Bitcoin, which has nearly quadrupled in price since September -- bitcoin can't stay here. Further price developments in Litecoin in the coming weeks and months should be exciting.

Exciting market developments

I think the bull market has just begun. Compared to 2017, the fundamentals of all cryptocurrencies have changed fundamentally. Now that Bitcoin has led the way, other cryptocurrencies can follow suit. Massive exaggerations on the scale of the last bubble are unlikely - after all, market participants should have learned their lesson from the last cycle.

Even so, shanzhai coins can now rise at record prices. In the case of Poca, the project could become a mainstay of the Defi market and a direct competitor to Ethereum. However, Ethereum is also poised to start the New Year on a strong footing.