This article was written exclusively for Investing.com
- Cryptocurrencies consolidating after parabolic move and correction
- Bitcoin and Ethereum remain in bull markets
- Speculative demand continues to lift new issues
- Holo has a market cap of nearly $1.8 billion
- Zcash just above Holo on the value scale
The cryptocurrency asset class has been on a wild ride in 2021. Traditionally, commodities have been the most volatile instruments, but they're tame compared to Bitcoin, Ethereum, and the other over 11,380 cryptos floating around in cyberspace.
Opponents continue to challenge the asset class based on its nefarious uses. Nonagenarians Warren Buffett and his partner, Charlie Munger, come from a different generation. The pair of 90+-year-old men have called cryptos “financial rat poison squared” and “disgusting and contrary to the interests of civilization.”
Many of the most vocal opponents of the relatively new asset class come from inside governments. These individuals fear the growth of the means of exchange that transcends borders and threatens traditional money supply control.
Proponents point to government and central bank foibles and manipulation, using currencies to expand and contract the money supply for political instead of economic reasons. The latest situation in Afghanistan as well as China’s crackdown on the technology sector only strengthen the case for cryptocurrencies as they are easily transportable without government interference.
Meanwhile, many of the 11,382 digital currencies are nothing more than speculative trading sardines that will wind up worthless. The best chances for survival are with the leading tokens that have established critical mass in market caps, creating liquidity. Holo (HOT) and Zcash (ZEC) are two of the top cryptos.
Cryptocurrencies consolidating after parabolic move and correction
After reaching a high of $65,520 on Apr. 14, Bitcoin dropped to $28,800 on June 21. Ethereum peaked at $4,406.50 in mid-May and fell to a low of $1,697.75 in late June.
After the wild ride to the upside and the quick drop to the downside, more than halving their value, the leading cryptocurrencies have consolidated and remained within the broad trading ranges. Bitcoin’s midpoint since the highs and lows stands at $47,160, with Ethereum’s at $3,052.13 per token.
As the cryptos digest the wild price swings, they remain in bullish mode in late August.
Bitcoin and Ethereum remain in bull markets
The weekly Bitcoin chart, below, shows five consecutive weeks of gains since the late June low.
Source: CQG
The weekly chart highlights the move to over the $48,000 per token level on Aug. 24. Bitcoin probed above the $50,000 level this week for the first time since mid-May. The price is now just above the midpoint of the trading range and continues to trend to the upside. A close over the $48,715 level on Aug. 27 would mark the sixth consecutive week of gains.
Source: CQG
The weekly Ethereum futures chart shows gains in five of the past six weeks, with only a marginal $20.75 per token loss during the week of Aug. 16. At the $3,205 level, Ethereum was above its trading range’s midpoint on Aug. 24.
Speculative demand continues to lift new issues
Speculative demand for cryptocurrencies likely dried up when the prices halved in value. However, it has made a significant comeback as prices jumped over the past six weeks.
Speculators continue to comb through the asset class, looking for the next token to deliver returns like Bitcoin, Ethereum, and a host of other tokens over the past years. Bull markets are magnetic for those looking to increase wealth, and we have never seen a bull like the one in the crypto asset class. With over 11,360 tokens to choose from and prices rising, the speculative fever is bound to increase. Everyone loves a bull market.
The tokens with a critical mass offer the best liquidity in the asset class. Holo (HOT) is the 65th leading crypto with a market cap of almost $1.8 billion. Zcash (ZEC) is just above HOT in 64th place, with a value of just under $1.9 billion level.
Holo has a market cap of nearly $1.8 billion
Holo (HOT) is an Ethereum token that powers Holo, a distributed peer-to-peer hosting platform for Holochain apps (hApps). Users hosting hApps on their personal computers can receive HOT tokens in return for using the blockchain.
Holochain’s website highlights the protocol:
“[It] delivers the promises of blockchain with a mashup of proven tech that provides self-owned data, a distributed database, and peer accountability.”
At $0.0104 on Aug. 26, HOT had a $1.80 billion market cap.
Source: CoinMarketCap
The chart shows that since late April 2018 HOT has traded as low as below $0.0004 and as high as $0.02848 per token. On Aug. 26, the 65th leading token was below the midpoint of its trading range.
ZCash just above Holo on the value scale
ZCash (ZEC) was the 64th leading cryptocurrency on Aug. 26, one spot above HOT. At $149.5 per token, ZEC’s market cap stood at the $1.88 billion level.
ZCash is a crypto with a decentralized blockchain that seeks to provide anonymity for its users and their transactions. ZCash increases user privacy by using zero-knowledge proofs (zk-SNARKs) to validate transactions without revealing information that could compromise a user’s privacy.
ZCash’s website states it is:
“A digital currency—fast and confidential with low fees. It’s perfect for mobile payments.”
Source: CoinMarketCap
Since late 2016, ZCash has traded as low as $25 and as high as $880.76 per token. At the $149.5 level on Aug. 26, it was trading well below its midpoint since late 2016.
HOT and ZEC are in the top 99.5% of the cryptocurrency asset class. With market caps at or above the $1.80 billion level, they offer the critical mass for trading and are likely to survive the culling of the herd of over 11,380 cryptocurrencies.