An Analytical Guide To Investing In Tezos (XTZ) In 2021
Where will XTZ price go in 2021?
What will happen to Tezos in 2021? The first cryptocurrency released was Bitcoin in 2009. After Bitcoin, many other cryptocurrencies emerged, including Tezos, and now there are more than 8,000 of them as per Coinmarketcap.
But it has been a bit challenging for people and investors to understand how cryptocurrencies work and what determines their price, as their nature is different and they are relatively new.
Various economic factors, such as inflation, unemployment rate, etc. affect the price of stocks or bonds. But when it comes to cryptocurrencies, things are different. What really determines their price?
What actually drives the Tezos (XTZ) price?
There are three main factors that most affect the Tezos price:
- The growing popularity of staking
- Tezos adoption
- Correlation to Bitcoin
Here at Trading Education, we analysed these three factors and below we will show in detail what we found out.
If you want to know more about investing in Tezos, check out this Ultimate Tezos Guide.
Why Tezos (XTZ)?
Why should an investor consider investing in Tezos? What makes this cryptocurrency so special? First Tezos was proposed in 2014 in a whitepaper then it went live in September 2018. Moreover, Tezos whitepaper was written by Arthur Breitman.
Tezos is a blockchain-based smart contract platform. Its native cryptocurrency is the tez or tezzie - XTZ. Tezos is not based on the mining of XTZ as it has Proof of Stake (PoS) consensus mechanism where token holders receive rewards for taking part in it.
Tezos’ current market cap is $1,745,579,739 with a circulating supply of 753,794,850 XTZ. As for now, the Tezos price stands at $2.31.
Tezos’ reputation grew in 2017 for its large initial coin offerings, successfully raising $232 million.
Tezos all-time price movements. Source: Coinmarkecap.
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What Drives Tezos (XTZ) Price?
Throughout its history of existence, Tezos price has experienced ups and downs. 2020 has been a good year for Tezos, and lately, the coin started gaining attention again as it reached its all-time high of $4.44 on August 13, 2020. As mentioned above, Tezos is not mining-based; instead, it relies on Proof of Stake (PoS) consensus mechanism.
However, what actually affects the price of Tezos?
Factor 1: The growing popularity of staking
The more demand there is for cryptocurrencies, the more their price surges upwards. As mentioned above, Tezos uses the proof of stake consensus mechanism, and it is the most popular cryptocurrency for staking. Proof of Stake (PoS) is more preferred than the Proof of Work (PoW) mechanism as it does not require expensive hardware. Staking got really popular in 2019, especially in 2020. Consequently, the demand for Tezos grew, causing an increase in the price of XTZ, even reaching its all-time high in August 2020. Let’s remember that until 2020 the price of Tezos was not experiencing any significant increase.
Tezos is the most staked cryptocurrency with 79.42%. Source: Stakingrewards.com
Factor 2: Tezos Adoption
Crypto adoption just keeps growing as many banks and financial institutions are realizing the importance of cryptocurrencies, thus investing millions of dollars in crypto or starting to apply blockchain technology.
In September 2020 Coindesk reported that Forge, a tech-focused subsidiary of the French investment bank, Societe Generale stated that it was experimenting with the Tezos blockchain to test digital securities and a central bank digital currency (CBDC).
Moreover, recently a Tezos development group called StableTech launched wrapped Ethereum tokens, which will allow the value of ETH to be moved to the Tezos blockchain. Wealthchain CEO Kevin Mehrabi announced on Twitter on December 12th that the new tokens called ETHtz will allow Tezos users to trade native tokens pegged to the price of Ethereum.
Wealthchain CEO Kevin Mehrabi announces on Twitter the launch of ETHtz.
Welthchain is one of the businesses that make up StableTech which consists of a group of developers committed to improving DeFi on the Tezos blockchain. Furthermore, through ETHtz, Tezos is trying to draw DeFi activity away from Ethereum network onto its own blockchain as a lower-fee option.
Positive news for Tezos such as those mentioned above could always affect the price, since as the more Tezos keeps expanding, the more investors will be attracted, consequently affecting the price and possibly making it surge upwards.
Factor 3: Correlation to Bitcoin
Although Tezos is not one of the cryptocurrencies that have a strong correlation with Bitcoin, still movements in the price of Bitcoin can have an impact on the performance of other coins, including Tezos.
According to Macroaxis, the correlation coefficient between Tezos and Bitcoin for October, November and December 2020 is 0.28. Values of the correlation coefficient between two crypto-assets range from -1 to +1. So, in the case of Tezos and Bitcoin 0.28 tells us that yet there is still some correlation between the two pairs.
Tezos vs Bitcoin performance. Source: Macroaxis.com
Would you consider investing in Tezos XTZ?
How To Invest In Tezos (XTZ) For 2021?
Cryptocurrencies are currently experiencing a special stage, with Bitcoin topping the $30,000 price tag, even reaching the historical price of over $40,000 at the beginning of January 2021, which is also marked as the all-time high price as per Coingecko.
Attention has now grown towards cryptocurrencies, and many experts predict continued growth, followed by altcoins as well. Will Tezos grow as well? Let’s take a brief look at Tezos current price and let’s see what predictors have to say for the future.
How much can the price of Tezos (XTZ) go in 2021?
At the moment Tezos price stands at $2.31. Walletinvestor, which is actually not known to be so optimistic when prediction coin prices, has a positive prediction for Tezos. In 2021 according to them, the price might reach $5.06.
Tezos price line and forecast trend line 2020-2021. Source: Walletinvestor.
Digitalcoin says that the price of Tezos could turn into bearish mode from April 2021 to October 2021. However, according to them, XTZ might rise back up at $5.23 in December 2021, experiencing an increase of 126.58% from now.
Tezos (XTZ) Price Prediction Chart 2021. Source: Digitalcoin
Tezos (XTZ) Price Beyond 2021
Tezos long term price predictions are optimistic as well.
Will Tezos reach $10?
Although it might not be easy to accurately predicts a coin’s price in a certain period of time, Walletinvestor predicts that in December 2023 Tezos could reach $10.04 which would bring nice profits to those who have invested now. Further according to them, Tezos could reach $13.11 by December 2024, then 15.95 a year later, in December 2025.
Moreover, Digitalcoin although it predicts some significant price decreases for Tezos throughout the next years, yet they are optimistic expecting XTZ to reach $12.43 by February 2026, recording an increase of 442.75%
Does Tezos (XTZ) Have A Future?
Given the growth of decentralized finance (DeFi) and the role that Tezos has in it, then we can say that Tezos has a bright future. Also considering the above optimistic forecasts for Tezos price in the future by Walletinvestor and Digitalcoin with potential for growth of 442.75% then it can be said that Tezos is indeed a promising project with a promising future.
If we look at them in general, the future of cryptocurrencies is certain because they are already in the initial stage of their institutionalization. Companies, banks and financial institutions are continuing to invest heavily in cryptocurrencies, especially Bitcoin, and are beginning to implement blockchain technology, including Tezos as mentioned above. Therefore, these are clear signs that cryptocurrencies can be a serious competitor in the financial world in the near future.
Is Tezos (XTZ) A Good Buy?
The price of Tezos is expected to increase in the future, and this makes this cryptocurrency worth investing in. Since the forecasts are full of optimism then, if you invest in Tezos now, you could enjoy good profits in the not too distant future.
Tezos is a serious project and has a dedicated team behind it that is aiming to leave their mark by becoming a key component in the decentralized finance (DeFi) world.
However, since forecasters predict that 2021 will be similar to 2020 in terms of prices for Tezos, hence Tezos is a good investment for the long term - HODL. Those who invest now and have the patience to wait until 2025 or 2026 according to forecasts, could enjoy good profits.
Ready to start investing in Tezos XTZ?
What Are The Pros And Cons Of Investing In Tezos (XTZ)?
Each cryptocurrency has advantages and disadvantages when it comes to investing in them. Below we present the pros and cons of investing in Tezos.
Pros of investing in Tezos:
✅ Tezos is not simply a cryptocurrency. It has unique on-chain governance which makes the coin so “democratic” as the coin holders can participate in decision making.
✅ Tezos is an innovative blockchain platform, which, according to experts, gives a lot of potential for future growth.
✅ Tezos uses the Proof-of-Stake (PoS) consensus mechanism, which is way cheaper compared to other blockchains that use the Proof of Work (PoW).
✅ Many businesses could apply Tezos blockchain. If Tezos adoption keeps growing the demand will grow, consequently causing the price of XTZ to grow as well.
✅ Forecasters predict that Tezos price can grow in the future. Therefore, there is potential for profit investing in Tezos.
Cons of investing in Tezos:
❌ Tezos popularity has started to grow lately. Yet, it is nowhere near Ethereum or Bitcoin. So Tezos lacks promotion support.
❌ Tezos has faced lawsuits by ICO investors due to the delay of token issuance, which has damaged its reputation.
❌ Blockchain developers are not sure what transaction fees and the speed will be, as the demands and use of Tezos increases in the future, since many of them consider it as an immature network.
❌ Tezos' biggest competitors are Ethereum and NEO. Ethereum is actively growing so Tezos must stay up to date without losing the pace of development, in order to be a worthy competitor in the future.
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Virtual currencies are highly volatile. Your capital is at risk.
- There are three main factors that most affect the Tezos price, the growing popularity of staking, Tezos adoption and correlation to Bitcoin.
- Tezos is a blockchain-based smart contract platform. Its native cryptocurrency is the tez or tezzie - XTZ.
- Tezos is not based on the mining of XTZ as it has Proof of Stake (PoS) consensus mechanism where token holders receive rewards for taking part in it.
- Tezos' reputation grew in 2017 for its large initial coin offerings, successfully raising $232 million.
- Tezos reached its all-time high of $4.44 on August 13, 2020.
- Tezos is the most staked cryptocurrency with 79.42%.
- The correlation coefficient between Tezos and Bitcoin for October, November and December 2020 is 0.28.
- In 2021 according to Walletinvestor, Tezos price might reach $5.06.
- Digitalcoin is optimistic, predicting XTZ to reach $12.43 by February 2026, recording an increase of 442.75%.
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