The cryptocurrency market has continued to struggle demonstrating gains for two straight days. Today, on January 30, major cryptocurrencies like bitcoin and Ethereum dropped by nearly 5 percent.
Most notably, South Korea’s e-commerce platform WeMakePrice has started the integration process of 12 cryptocurrencies listed by Bithumb. Within a few weeks, millions of active users on WeMakePrice will be able to transact using bitcoin and 11 other cryptocurrencies.
Last week, Starbucks chairman Howard Schultz stated that if cryptocurrencies cannot be adopted by retailers and merchants, they will fail to evolve into legitimate currencies. Already, despite the underlying scalability issues of most major cryptocurrencies, some of the largest retailers in Asia have started to integrate bitcoin and Ethereum.
Currently, the Bitcoin network is settling about 250,000 transactions per day while Ethereum is processing more than 1.2 million transactions on a daily basis. The integration of the two cryptocurrencies by major retailers could significantly increase their transaction volumes, given that the merchant adoption for leading cryptocurrencies is still minimal as of current.
The demand for cryptocurrencies is still increasing at a rapid rate, given that Robinhood has already added a million users onto its cryptocurrency exchange waiting list. Binance, the largest cryptocurrency exchange in the market, also added 6 million users in the past 6 months, allowing it to become the fastest growing startup in history.
But, the market has also experienced an exponential growth rate over the past few months. In 2017, the price of Ripple increased by 330x, Ethereum by 150x, and bitcoin by 19x. Investors within the cryptocurrency market only expect the price of cryptocurrencies to surge by large margins most of the time while dismissing the importance of corrections.
Short-term corrections allow the market to strengthen because weak hands drop off from the market. Because of the week-long slump the market experienced over the past 7 days, many speculators have left the market and the market has stronger hands. Such a trend is evident in the decrease in the daily trading volume of most cryptocurrencies in the market.
Often, the price of cryptocurrencies tend to increase after a short-term correction or slump. Although this has not been the case throughout January, it is important to consider two major factors for market recovery: tax refunds and South Korea cryptocurrency exchanges.
In February, US citizens and residents receive their tax refunds. This would lead to thousands of dollars in unexpected money that either would go to savings or investment. Given the adoption of cryptocurrencies, it is likely that a large portion of US tax refunds would flow into the cryptocurrency market.
This week, South Korean cryptocurrency exchanges open registration for new investors and traders, which may lead to a spike in volume.
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Last modified: March 4, 2021 5:04 PM