Alternative markets update january 2021

Alternative Markets Update January 2021
For Ethereum (ETH), the development from end December 2020 to mid-January 2021 was even better for ETH, as it surged from $600 to $1,350 on 10th January 2021. Figure 2 shows the development of ETH during 2020 and in early 2021. The huge jump from $900 to $1,200 happened just a few days after Winklevoss pointed out that ETH is easily the most undervalued cryptocurrency. That argument seems reasonable, especially when considering that in the 2017 bull run ETH was worth around $1,500 when BTC was just below $20k. However, now ETH is still significantly below the mark from 2017, whereas BTC is already worth more than double than it what it was back then.

Commodities had a very rough year in 2020, despite recovering most of their losses. Figure 3 shows the CRB Commodity Index over 2020. From its low in April, caused by Covid, it gained 70% as of early January 2021. One extreme example of this development is crude oil, whose futures were negative in March 2020, and is now trading at around $50 per barrel, which is almost at the price levels prior to Covid.

Ethereum Price from January 2020 to January 2021, Source: CoinMarketCap, January 2021

Crude Oil (WTI) from January 2020 until January 2021, Source: CharlieBilello, January 2021

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RESEARCH PERSPECTIVE VOL. 147 January 2021 Alternative Markets Update January 2021 December 2020 and January 2021 were other months that treated cryptocurrencies very well. Since, Bitcoin (BTC) surpassed the $20k mark on 16th December, it reached new highs of $42k in early January. Figure 1 shows the development of BTC back to January 2020. 2020 was already the year of cryptocurrencies and the few days in 2021 did not change. BTC’s market capitalization also reached a market cap of more than $1tn when its price hit the $40k mark. As a result of this extremely good performance in 2020, there has been a surge in crypto funds over the past month. This is certainly a reason for the increases in BTC alongside the capital invested from wealthy individuals. Furthermore, the public opinion on BTC has shifted tremendously since its last bull run in 2017, in particular, its similarities with gold are promising. For Ethereum (ETH), the development from end December 2020 to mid-January 2021 was even better for ETH, as it surged from $600 to $1,350 on 10th January 2021. Figure 2 shows the development of ETH during 2020 and in early 2021. The huge jump from $900 to $1,200 happened just a few days after Winklevoss pointed out that ETH is easily the most undervalued cryptocurrency. That argument seems reasonable, especially when considering that in the 2017 bull run ETH was worth around $1,500 when BTC was just below $20k. However, now ETH is still significantly below the mark from 2017, whereas BTC is already worth more than double than it what it was back then. One last point on cryptocurrencies is that Ripple (XRP) has announced it is being sued by the SEC for unregistered sales. After the announcement XRP dropped by two thirds of its value within two days but has recovered some of it. Nevertheless, XRP is far away from its value of $0.68 at the end of November, as it is currently trading at $0.33. Figure 1: Bitcoin Price from January 2020 to January 2021, Source: CoinMarketCap, January 2021 Figure 2: Ethereum Price from January 2020 to January 2021, Source: CoinMarketCap, January 2021 Commodities had a very rough year in 2020, despite recovering most of their losses. Figure 3 shows the CRB Commodity Index over 2020. From its low in April, caused by Covid, it gained 70% as of early January 2021. One extreme example of this development is crude oil, whose futures were negative in March 2020, and is now trading at around $50 per barrel, which is almost at the price levels prior to Covid. Another, even better example, is copper, whose price per ounce was around $2.80. It then dropped to $2 during the crisis and has steadily risen since then. It is now trading at an 8-year high with $3.70. Figure 4 and 5 show the price development of crude oil and copper since January 2020. Figure 3: CRB Commodity Index from January 2020 until January 2021, Source: CharlieBilello, January 2021 Figure 4: Crude Oil (WTI) from January 2020 until January 2021, Source: CharlieBilello, January 2021 Figure 5: Copper from January 2020 until January 2021, Source: CharlieBilello, January 2021 Another major event that took place end of December is the conclusion of the trade agreement between the U.K. and the EU and its approval from UK and EU lawmakers before the end of the transition agreement end of 2020. Furthermore, in many countries at least one vaccine has been approved by now and people are getting vaccinated. It remains to be seen during 2021 how the efficiency and protection works our and whether the vaccinations work on other virus strings that have emerged over the last months. 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