It's been a year since the COVID-19 pandemic really broke out and sent global markets into a tailspin. The situation has largely recovered since then, but the crisis has forced many to seek alternative investments, especially in cryptocurrencies.
This growing demand for cryptocurrencies is evidenced by the explosive rise in prices in the cryptocurrency markets. While some have made significant progress, not all assets are undergoing a smooth transition.
Bitcoin (BTC)
Exactly a year ago, Bitcoin briefly traded below $ 4000 after free falling from the $ 8000 level.
Its stable growth in the implementation price over the past year can be explained by a number of factors. When workers were sent home due to coronavirus quarantine, many began to plunge into the market. In the United States, this has been exacerbated by many incentive tests.
Institutional investors began to worry about the dollar's potentially shrinking leverage. At the same time, the US Federal Reserve continued to pump money into the economy to stave off a recession caused by COVID.
Many investors, both large and small, have begun to turn to bitcoin as insurance against inflation. This philosophy was laid out by MicroStrategy CEO Michael Saylor. His company first began purchasing bitcoins in August 2020 and currently owns 91064 BTC. Since then, the high-profile Tesla acquisitions of Elon Musk and Jack Dorsey's Square have improved his prospects.
Ethereum (ETH)
While Bitcoin was gaining traction, it was only natural for the rally to spread across all cryptocurrency markets. This apparently also helped boost the level of Ethereum, which is ranked second. However, he was also helped by the growing popularity of ETH applications, in particular decentralized finance (DeFi) and non-fungible tokens (NFT).
According to DeFi Pulse, the total value of all DeFi protocols was only $680 million at the beginning of 2020. By the end of the year, it had reached $15 billion, an increase of 2100%.
Last year, the total value of transactions in the NFT sector increased by 299% over the same period last year. According to a joint study by NonFungible.com and forecast company L'Atelier BNP Paribas, this amount was more than $ 250 million. Fast forward to our days and we can see several pieces of NFT art selling for millions of dollars apiece.
Ripple (XRP)
Meanwhile, XRP is not doing as well as its former cryptocurrency rivals. His reputation took a hit when the US Securities and Exchange Commission (SEC) formally indicted Ripple Labs Inc. and its former and current CEO.
The company and its executives have worked hard to fight the allegations, but the damage appears to have been done. While XRP is undoubtedly doing better than a year ago, its comparative market capitalization dropped significantly. It currently has a market capitalization of $ 20 billion.
A quick look at the three shows that while BTC has increased by about 1000% since the beginning of the year, ETH actually performs even better, by over 1500%. Meanwhile, XRP is showing "only" a 232% increase over last year.