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Bitcoin and Ethereum in 2021: What to expect?

Photo of: Nathan VDH
by Nathan VDH

According to Frank Holmes of Global Advisors, crypto-actives such as Bitcoin and Ethereum should perform very well in 2021, just like gold. And Bitcoin is benefiting above all from its scarcity as a result of halving.

Barring a sudden turnaround, Bitcoin and Ethereum should end the year 2020 with very good performances. Since January, the value of Bitcoin has appreciated by more than 150%. For the ETH, it is even more than 300%.

In 2017, these crypto-actives already experienced a spectacular jump, before falling back the following year. But for the head of the investment manager Global Advisors, 2021 should instead be another successful year for the BTC and Ethereum.

Frank Holmes anticipates good performance for crypto-actives, alongside the more traditional asset of gold. Bitcoin and Ethereum are benefiting from growing adoption.

“The number of portfolios and individuals adopting Bitcoin has been growing steadily over the past three years. A nice steady growth,” says the finance expert at Kitco News. Adoption is a first factor in this appreciation.

However, Holmes does not take up the comparison between gold and Bitcoin. For him, cryptocurrency is not based on the same fundamentals. The main driver of digital assets, he says, is halving.

Clearly, it is the reduction in the supply of Bitcoin that drives its price. “Tomorrow, if every gold mine in the world announced a 50% reduction in supply, I can assure you that gold would be at $10,000,” says the head of Global Advisors.

Scarcity combined with accelerated adoption by institutions and large enterprises, such as MicroStrategy, would mechanically lead to the rise of Bitcoin. For ShapeShift.io CEO Erik Voorhees, the involvement of these players also provides protection for these assets, including from regulators.

But what about Ethereum? Its value is benefiting from developments in decentralized finance. According to CoinMarketCap, the amount of crypto involved in DeFi’s smart contracts now reaches 14.6 billion dollars.

However, the Ethereum blockchain is now capital and fuel for the DeFi space. According to October DappRadar indicators, Ethereum represents 96% of the total transaction volume ($125 billion in Q3).

If other blockchains are trying to invest in DeFi, Ethereum remains the reference. Moreover, this domination is also found in active crypto-wallets. Ethereum portfolios thus account for 57% of the active wallets every day.