Crypto is Now the World’s Fifth-most Circulated Currency by Value

The total capitalization of the cryptocurrency market recently exceeded $1 trillion. The Bitcoin rally helped to get to the mark: it accounts for two-thirds of the value of all cryptocurrencies, and it updates the records of value day after day, exceeding $30,000. We should note that according to data collected from central banks and other economic databases, crypto is now the fifth-most circulated currency.

According to CoinGecko, two-thirds (67.7%) are on the Bitcoin accounts for the entire capitalization of cryptocurrencies, another 13.4% — on another digital platform, Ethereum.

Bitcoin in 2021 is growing rapidly: at the end of December 2020, the cryptocurrency exceeded $27,000, and by January 7, it had already crossed the $37,000 mark, jumping at once by 10%. Cryptocurrency remains volatile: on January 4, after a record growth, it fell sharply from $34,000 to $28,000, but then recovered and continued to add to the price, with a consequent second large correction on January 21. For the whole of 2020, the value of the cryptocurrency has more than quadrupled, Bloomberg calculated.

Crypto trading gaining a foothold

Crypto’s popularity in 2020 and 2021 was accompanied by an incredible surge in trading. Alongside Forex trading, when people were forced to stay at home, crypto trading also increased. According to other statistics, Forex trading for beginners and Bitcoin trading were among the most searched queries on Google. Bitcoin’s huge revival, as well as sharp fluctuations in other currencies, led to an increase in the following trend.

During the coronavirus, news about various crypto and financial activities was also very popular. You can check this URL, to find out more information on how the pandemic crashed markets and damaged the world economy to great extent. Even Bitcoin during the spring period had some difficulties but managed to get on its feet quickly.

2020 has been a great year for cryptocurrencies

Analysts cited among the reasons for the rapid growth of the market interest from retail traders-speculators, following the trend of analytical funds and wealthy institutional investors, the agency recalled. JP Morgan on January 5 admitted that Bitcoin could rise to $146,000 in the long term. This may also be one of the reasons for the rapid growth of Bitcoin on January 7, Bloomberg admitted.

Digital currencies are becoming more expensive at a time when governments are spending large sums to support the economy, and some analysts fear an imminent collapse, the agency writes. Bitcoin was already experiencing a big drop when it reached $20,000 for the first time at the end of 2017 but then fell to less than $5,000.

Bitcoin proponents insist it is a good tool to hedge a weakening dollar and risk rapidly rising inflation similar to gold, Bloomberg added. The more people see that their assets, especially ordinary currencies, are losing value, the more they look for alternatives, Geoffrey Morphy, president of the Canadian crypto company Bitfarms, told the agency.

The number of active Bitcoin accounts is approaching a historic record at the end of 2017, according to the research company Flipside Crypto. It suggests that this could mean plans by some Bitcoin owners to sell the cryptocurrency. Since less than 2% of accounts own 95% of Bitcoins, several large transactions can have a significant impact on the value of the asset, the agency explained.

Why are cryptos becoming popular?

2020 was a difficult year for the economy, but at the same time gave a powerful impetus to the digitalization of all kinds of services. Including payment areas. Cashless payment is already a ubiquitous reality. Although the penetration rate of the "digital economy" is still heterogeneous.

Before the pandemic, only a quarter of all payments in the European Union were digital, although their spread was growing. Lockdown, introduced in the spring, reinforced these trends. In the first half of 2020, the number of transactions made through the German interbank network and debit card service Girocard increased by 21% compared to the same quarter of 2019. At the same time, there are countries in Europe that have already almost completely given up cash, such as the Netherlands or Sweden.

A similar pattern was observed in the United States. According to statistics of the popular U.S. payment service Square, the share of "cashless" local companies (i.e. accepted more than 95% of payments cards) tripled from March 1 to April 23 — from 8% to 31%.

Digitalization is finally changing the largest branch of the global economy — trade. The main change here is its transition into the online space - to put it simply, the growth of the e-commerce market. The number of customers in online stores has increased significantly.

In the discussion about the imminent advent of the "contactless society" do not forget about the main financial technology of recent years - cryptocurrencies and blockchain. Their use in the digital economy is obvious.

The successful experience of cryptocurrencies is already being adopted by the state. China has moved further in this direction, where the digital yuan is an experimental means of payment in entire cities. The nature of cryptocurrency is such that they can be both a means of preserving value (i.e. an investment asset) and a means of calculating as ordinary money.

Because cryptocurrencies are a virtual asset, their financial properties can be programmed. Under certain conditions, the price of the cryptocurrency can be determined by the market, as in the case of Bitcoin, or be unchanged.

Worldwide, the number of users of cryptocurrencies is growing among people and businesses. They are used not only for investment but also for payment of goods and services. If individual users can transfer coins to each other through wallets that are very easy to install and customize, then for business it is not so easy.