Tezos (XTZ) Price Prediction for 2021: Continuing the Up-Down Pattern
Skerdian Meta • 7 min read
Tezos – Forecast Summary
|Tezos Forecast: H1 2021|
Price: $5 – $6
Price drivers: Crypto market sentiment, Elon Musk’s comments on cryptos, EDO Upgrade
|Tezos Forecast: 1 Year |
Price: $10 – $15
Price drivers: Tezos upgrades, Recovering global economy, Tezos Upgrades
|Tezos Forecast: 3 Years |
Price: $50 – $100
Price drivers: Crypto market sentiment, DeFi Adoption by Tezos, Upgrades, Global politics
Tezos (XTZ) seems to be one of the weakest cryptocurrencies at the moment, having gained only around 300% in value from the normal range of $ 1.80 during the last 6-7 months, while other digital currencies have made some massive gains. Although this is still impressive for Tezos, because in the last long-term forecast for this altcoin back in November, buyers were still nowhere to be found, although the crypto market was surging higher. But, it finally started to catch up with the rest of the gang, surging above $ 5.50 by the middle of February.
However, it is now trading around $ 2 lower, which indicates weakness in this cryptocurrency. Other cryptos have been stubbornly holding onto most of the recent gains, and a bunch of them keep making new ones, including [[Bitcoin]] , which broke above $ 50,000 on February 15, with Elon Musk and Tesla giving it a big hand, while Tezos has given back nearly 40% of the value already. Tezos has a history of reversing down after strong bullish moves, and giving back most of the previous gains, and the current pullback doesn’t promote any confidence among buyers either, and it could even scare them off. But these are different times for the crypto market, which might change the habit for Tezos, so we will see in the following weeks whether Tezos will hold onto its gains or reverse back down, like it has on previous occasions.
Recent Changes in the Tezos Price
|Period||Change ($)||Change %|
Factors Affecting Tezos
Tezos is another relatively new cryptocurrency, and it ranks 23rd by market capitalization, at around $ 4.408 billion, which is a long way up from $ 1.550 billion in November 2020, at the time of our previous long-term forecast. Although, as we mentioned, that evaluation in the market cap is smaller than the increase in the market cap of other cryptos. Tezos started life in 2018, which was not the best time for cryptocurrencies, with the digital currency market in the middle of a crash, after the surge at the end of 2017. As a result, it followed the main cryptos down in the first few months of its life, losing more than 90% of its value by December of that year.
Then Tezos came back to life in 2019, as its use increased and the cryptocurrency market started reviving again, and in August 2020 it reached $ 4.38. It didn’t benefit from the surge in the digital currency market during Q4 of 2020, while Bitcoin and other cryptos were surging higher, which raised questions. But, it joined the crypto surge, starting in January and particularly in February this year, despite a few failed attempts previously. The new Tezos upgrade, EDO, improved the utility and development of applications, particularly the DeFi-related ones, which helped push the price higher in mid-February. But as mentioned above, it has given back most of those gains, as the rest of the crypto market is also retreating.
Tezos Live Chart
Tezos Price Prediction for the Next 5 Years
As is the case with all other cryptocurrencies now that they have acquired safe haven status, Tezos is also affected by the sentiment in the crypto market. However, in recent months, it has fallen behind other major altcoins, which have been surging higher, while the XTZ/USD pulled back lower in the third week of February 2021, trading at around $ 3.40s from the highs at $ 5.40. Besides this, the fundamentals behind the network are a bit brighter, as Tezos is partnering with certain banks in Europe, and aims to become the blockchain of choice for a major European central bank.But we will have to wait and see how that goes, because the reaction of the markets to the news wasn’t too optimistic, and it hasn’t been too optimistic about Tezos in general.
The Tezos project started off in 2014, when Arthur Breitman and Kathleen Breitman released the Tezos whitepaper, which was called the “Position Paper”. Together, they founded a startup firm called Dynamic Ledger Solutions, which was created to write the code that would underpin the Tezos protocol. It took three years, until 2017, when the Texos Foundation raised $ 232 million in a fundraiser. One of the main investors in Tezos ICO was billionaire Tim Draper.
The Tezos network uses a Proof-of-Stake (POS) mechanism, which Ethereum has been adopting recently, since it is simpler to use than the Proof-of-Work (PoW), and requires less energy. The Tezos network is a decentralized smart contract and application network. It has an on-chain governance layer, in order to enable efficient network upgrades and provide a transparent stakeholder community. It makes automatic upgrades, which go through a voting process to be accepted by the community. Just recently, it made the latest upgrade, which is explained below.
Recent Updates for Tezos
Following the previous section, the Tezos network makes auto upgrades periodically, which allows for itself to be amended. It goes through a process performed by committing operations to the stored blockchain, in order to submit proposals (intended code changes) and to vote on those changes. If the proposals get enough votes, they are accepted. The protocol then updates itself with the new code changes, which are automatically incorporated.
The way the Tezos update protocol works is that participants can get involved with the network’s governance via the “baking” process, where they effectively stake 8,000 XTZ. This creates a financial incentive to act honestly. These participants are called bakers, and their task is to vote on proposed changes to the blockchain code, in a four-step procedure, which takes approximately 23 days.
|Name of the Upgrade||Voter Approval||Description|
|Athens||May-19||Increased gas limit per block; Lowered the size of the roll from 10,000 ꜩ to 8,000 ꜩ.|
|Babylon 2.0-2.1||Oct-19||A more robust version of (Emmy+) the blockchain’s consensus algorithm; It made the development of smart contracts easier; Refined the delegation process.|
|Carthage 2.0||Mar-20||Increased the block and operation gas limit; Improved the accuracy and resiliency of the formula used for calculating baking and endorsing rewards; Fixed various small issues.|
|Delphi||Sep-20||Improved gas costs. Reduced storage costs by a factor of 4 to reflect improvements in the underlying storage layer.|
|Edo||Feb-20||This upgrade adds Sapling, Tickets, a new “Adoption Period” to the upgrade process, BLS12-381 to enable privacy-preserving smart contracts and tickets for native permissions, minor bug fixes, and some improvements to performance and gas consumption.|
The demand for Tezos remained low until January 2021, as the DeFi coins became more widespread, but, as mentioned above, there have been some developments in this sector, with the EDO upgrade, which will make it more attractive for transactions. Tezos has been adopted or has signed collaboration agreements with different institutions. Last year, Banque de France announced that French investment bank Societe Generale as well as other organizations, will be working on a project to conduct interbank settlements in Europe, using a Central Bank Digital Currency, which might make the Tezos network popular in France. This could be big news if it materializes, although the reaction was minimal, as we saw back then, which suggests that traders are not very optimistic about it, although it is still a bit early to judge.
One of the leading property developers in Britain, Alliance announced recently that it is going to tokenize UK real estate to the value of GBP 500 million. It is doing this for its first digital security project, the River Plaza in central Manchester, together with tZero and the digital securities advisory boutique Megalodon.
Reit BZ, which is a Brazil-based project backed by Latin America’s largest investment bank, BTG Pactual, offers foreign investors access to Brazil’s growing real estate market through a security token called Reit BZ (RBZ). RBZ tokens are backed by distressed real estate assets, mainly in the states of São Paulo and Rio de Janeiro. Tezos serves as the default blockchain offered for RBZ’s security token.
Leading Crypto Wallet BRD Enables First-Ever Staking Offering with Addition of Tezos. One of the safest mobile cryptocurrency wallets, trusted by around 7.5 million users and with more than $20 billion worth of digital assets under protection, announced support for staking with the integration of the Tezos blockchain. Travala.com which is one of the main cryptocurrency-friendly travel booking platforms, backed by Binance, has also partnered with Tezos Commons recently. This is in order to integrate the self-amending cryptographic ledger Tezos, allowing users to book more than 3,000,000 travel products worldwide, such as hotels, flights, tours and activities on Travala.com, with the native Tezos token (XTZ).
Technical Analysis – Most of the Gains Have Been Lost Again
Tezos has been volatile during its short life-span, and it continues to be so after the recent surge and the reversal back down in about one week. But it is bullish in the long term nonetheless as the charts show, although nowhere near as bullish as the rest of the altcoins. We have seen some wild rallies in Tezos, followed by similar pullbacks down. This digital currency started life at a bad time for cryptocurrencies, at the end of June 2018, when the crypto market was making the great descent, after the mighty surge in late 2017. It started at around $ 4 and climbed to $ 4.38, but then it started declining, and it had hallen to $ 0.325 by December of that year, where it remained for a few months, forming several small doji candlesticks, which are bullish reversing signals after the decline. The price reversed higher at the beginning of 2019, and it has been on a bullish trend since then.
Tezos has given back most of February’s gains
The 20 SMA (gray) was broken in January 2020, and it turned into support immediately. It held for a second time in March, when the coronavirus broke out, which sent the crypto market diving lower, due to the uncertainty, but later the global uncertainty turned out to be positive for digital currencies, and the XTZ/USD had climbed to $ 4.33 by August. But Tezos didn’t follow the rest of the market in the following months, and the price reversed lower, falling to the 20 SMA again on the monthly chart. The 20 SMA held once again, suggesting that this moving average is the ultimate support for Tezos, which makes it a good place to buy, since the price is retreating down again, after the bounce off that moving average earlier.
Will Tezos retreat back down to the trendline?
On the weekly chart, we see that the 50 SMA (yellow) turned into support when the price moved above it. This moving average was the ultimate support indicator for Tezos on this time-frame until October 2020, when it was broken, but the 100 SMA (green) took its spot. Tezos bounced off this moving average in late December and surged higher in February. But it is reversing down as we head towards the end of the month, which means that the pattern of strong bullish moves, followed by big bearish reversals, continues. The 20 SMA held the decline on the weekly chart initially, which stood at around $ 3, so let’s see if the decline will end now, or if it will continue further to the ascending trend line at $ 1.80, where the 100 SMA is also standing at the moment.