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2020 may have been a year filled with challenges, but Bitcoin, stablecoins, and DeFi protocols have emerged as the top-performing cryptocurrencies of the year.
**Bitcoin:**
First and foremost, Bitcoin has experienced a significant surge since January 1, soaring from $7,195 to $28,422. Over the course of 12 months, Bitcoin's price has risen by 290%, outperforming major stock indices and most stocks, with the exception of a few like Tesla (TSLA).
The primary drivers behind Bitcoin's surge include increased institutional demand, a favorable financial environment due to central bank liquidity injections, and the decline of the U.S. dollar.
**Ethereum:**
Ethereum started the year with a price of $128 on major exchanges and reached $748 on December 30. The main catalyst for Ethereum's rise in November was the launch of ETH2.0, which initiated after deposits surpassed the threshold of 400,000 Ethereum.
ETH2.0 represents a major network upgrade for Ethereum, as it will exponentially scale the blockchain over time. Without ETH2.0, Ethereum could process less than 20 transactions per second. With Eth2ETH2.0, this number could increase to thousands of transactions per second.
**Altcoins:**
Most of the older altcoins (from 2017 or earlier), including XRP, Cardano (ADA), and Stellar (XLM), have not performed as well as Bitcoin this year.
Among these altcoins, XRP initially performed exceptionally well in November as Bitcoin broke its all-time high. XRP's price at the beginning of 2020 was $0.1923, reaching a peak of $0.9210 in about 11 months. However, following the SEC's lawsuit against Ripple, XRP experienced a significant drop, hitting a low of $0.17.
**Smart Contract Protocols:**
Smart contract-related cryptocurrencies such as Polkadot, Chainlink, EOS, and Tezos have also seen increases since the beginning of the year. These four cryptocurrencies related to smart contracts experienced significant gains as Bitcoin surged to $20,000.
For example, Chainlink benefited from the explosive growth in the decentralized finance (DeFi) sector. Chainlink is a blockchain network centered around oracles, which aim to provide data for DeFi protocols. As the total value locked in DeFi reached $16 billion, Chainlink and many other DeFi-related tokens also rose.
Despite various driving factors, Polkadot, EOS, Tezos, and Chainlink have lagged behind Bitcoin in year-to-date gains, with price volatility tending to stabilize. The primary reason for the subdued price movements is Bitcoin's rapid ascent after breaking $20,000, causing altcoins to retreat.
Market capitalization of specialized tokens like WBTC, USDC, and Tether has also seen significant growth. These tokens are primarily used in DeFi protocols, and the rapid increase in user activity has made each token unique in the DeFi ecosystem. |
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Post time 2-2-2024 04:57:17