TokenInsight is back with a rundown of Bitcoin's price rise, and DOT's potential, in 2021.
Bitcoin became the most impressive investment asset in 2020. The price of Bitcoin rose for nearly four times in 2020. According to the China International Capital Corporation (CICC)’s “Blockchain and Cryptocurrency Research Report,” the annual return of Bitcoin surpasses all other investment assets’ return. On Dec. 31, 2020, Bitcoin’s price hit all-time-high again, contributing a perfect ending for cryptocurrency in the last day before new year.
Bitcoin successfully attracted the attention of institutional investors and the traditional financial market. This kind of “value recognition” for Bitcoin gives the cryptocurrency industry epoch-making significance.
DOT also showed remarkable performance this week, suggesting a flourish for Polkadot and the DeFi market in the new year.
Bitcoin: Next Step, $30,000
The Christmas holiday did not make the crypto market cool off at all. Last week, the price of Bitcoin was close to $29,400, just one step away from the $30,000 mark (which it hit on Jan. 2, 2021). The trading volume of Bitcoin was also increasing steadily during the Christmas holiday. The spot trading volume reached $35.79B, and the perpetual contract trading volume reached $299.1B. Bitcoin is creating miracles every week.
The rise in price is not without indication. Last week, Whalemap analysts found that the Bitcoin whales (referring to the major traders in the Bitcoin market) clusters have formed around $23,409, which means that a large number of investors with sufficient funds buy Bitcoin at this price and store them. As a result, Bitcoin’s supply reduced in the short-term, which pushed the price of Bitcoin to continue to rise after it stabilized at the $23,000 line.
In addition, the options market reacts faster before this week’s rise. On Dec. 28, 2020, derivative exchange Deribit’s Bitcoin vanilla options with $32,000 struck on Sept. 24, 2021 had reached $7,500, while $40,000 options had reached $5,800.
Moreover, Bitcoin options’ term structure indicated that the implied volatility of Bitcoin forward options expired in September is near the 85% line, which means that investors in the options market believe that the price of Bitcoin is expected to reach between $32,000 and $40,000, and it will be stable in an upward trend at present.
As of Dec. 31, the $32,000 options struck on Sept. 24, 2021 in the Deribit Options Exchange has reached $9,312, while the $40,000 options has reached $7,205.
The overall sentiment of the market is optimistic. From the perspective of the options trading distribution chart, many traders choose to sell put options to lock in the spot price (Note: After selling put options, if the buy-side executes the contract, the seller must buy a certain amount of a specific commodity from the buy-side of options. When the investor expects the market price of a specific commodity to rise, he can choose to sell put options).
Binance Supports Polkadot, DOT Has Potential
DOT showed remarkable performance this week, rising from $5 to the highest $7.7, and stabilizing around $7.4, performing a 178.95% rising compared with last week. At press time, DOT is $9.33.
The strong surge is likely related to the support from Binance, which invested $100 million in Polkadot for its ecosystem development.
As the pioneer in the cross-chain area, and founded by Ethereum co-founder Gavin Wood, Polkadot has always been an expected ecosystem for the community and DeFi market.
The positive reactions from the futures market are even more obvious. On the one hand, the futures price of DOT has risen to more than $8, which is 6% higher than the spot price. Investors' pursuit of DOT is evident.
On the other hand, as of press time on Dec. 31, the funding rates of DOT perpetual contracts are maintained at above the 0% line, and recent funding rates rise up obviously, which shows that there are enough more investors with bullish attitudes in the market than investors with bearish attitudes. Based on the endorsement of the top exchanges and the gradual expansion of the Polkadot ecosystem, DOT has sufficient growth potential in 2021.
Highlights Picked by TokenInsight
Coinbase, Binance and OKCoin Exchanges Suspend XRP Transactions
U.S. crypto exchange OKCoin is suspending XRP trading and deposits on January 4, 2021, until further notice. Coinbase will fully suspend XRP on Tuesday, Jan. 19, 2021, at 1 p.m. ET. Similarly, Binance will suspend XRP transactions on 14 Jan 2021.
Binance Launches Vanilla Options Contracts
Crypto exchange Binance on Dec. 28 2020 announced a new type of Bitcoin options contract that simplifies things for traders and lets them issue their own contracts for the first time.
Japanese Internet Giant Licensed to Issue First JPY-Pegged Stablecoin in New York
The New York Department of Financial Services has issued a trust charter to GMO-Z.com Trust Company, allowing it to “issue, administer and redeem” Japanese yen (JPY)- and U.S. dollar-pegged stablecoins in New York.
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