What changes should we expect in cryptoworld in 2021
However, people don’t just buy Bitcoin to make profit nowadays. The massive wealth shift towards BTC is mainly fueled by the unstable economic conditions on a global scale, primarily caused by the COVID19 lockdowns.
All this leads to certain trends and expectations we can look forward to within this year. And this is exactly what we will be discussing in this article. In the next few chapters we will briefly share our thoughts about the changes we expect to see in the world of crypto. Let’s delve in.
Expectation #1 – Bitcoin has a banner year
Following the Bitcoin halving, Bitcoin recovered from its $4000 lows to slightly above $40.000 after capitalizing on bullish news all throughout the year. For many investors this signals extreme volatility which makes the asset less desirable, but we expect this to change once the popular cryptocurrency crosses the $100.000 benchmark. At this point we could see a massive sense of FOMO taking over the market, causing the prices to grow even more.
Expectation #2 – Institutional adoption is achieved
In 2020 we saw several public companies make the first steps towards adopting Bitcoin. More specifically, we saw companies in the caliber of Microstrategy and Square investing (part) of their balance sheet into BTC, a decision which has helped them earn hundreds of millions in a short period of time. We expect more companies to allocate part of their cash reserves into Bitcoin as the economy continues to tumble.
Expectation #3 – More countries will start mining Bitcoin
Venezuela, Iran, Argentina, Russia, and most recently Pakistan, are a mining Bitcoin using the country’s energy reserves. These countries fund large operations that lead to the development of mining farms, hoping to hoard as much BTC as possible before we experience parabolic conditions in cryptocurrency prices.
Expectation #4 – DeFi will grow massively
In the summer of 2020 we saw a large shift of attention towards decentralized financial applications, as well as cryptocurrency projects that support their development. We currently see centralized institutions all over the world overpower the public and go against their initial community guidelines. The most recent occurence that stood out was the removal of Donal Trump from Twitter – a strong call for more decentralization. With $14 Billion currently locked in DeFi we believe that is lots of room for improvement and expect to see the industry grow further in 2021.
Expectation #5 – Derivatives will increase in popularity
Derivatives products, including Bitocin futures, options, and more, will increase in popularity, as bullish market conditions have become a near certainty. Each derivatives product offers different options when it comes to trading practises, but we can already see more people exploring the potential benefits of using these to make profit.
Expectation #6 – Passive income will bring more retail $$
The growth of popularity in both staking, savings, and yield farming has made the crypto industry very intriguing for Gen Zs and Millennials. But the high returns are not the only benefit that leads to passive income. It is paired with the negative interest rates that have been imposed to normal savings accounts after the COVID19 issues pushed central banks to reconsider their positioning. In other words, crypto is now not only a long term investment but an additional source of income for those who are willing to invest a significant amount of money.
Expectation #7 – Regulatory frameworks will tighten
Regulations are coming – we have already heard about this quite a lot. Only this year things seem a bit shaky and this creates a risk for the survival of the crypto industry. As the US government seems to be undergoing a restructure of their economy, the annual inflation rates are expected to spike massively and for many years to come. The only way out for those who wish to protect their wealth is to hedge into precious metals or Bitcoin. Hence, we expect the government to fight back, by creating unnecessarily complex and even “unfair” regulations for those who convert to a Bitcoin standard.
Expectation #8 – More entry points for retail investors
Already in 2020 we saw the massive growth of the industry thanks to the addition of crypto purchases on apps like Paypal and CashApp. These payment systems expose Bitcoin and other cryptocurrencies to hundreds of millions of users, and we expect this to lead to more individuals being educated on the fundamentals and long term potential of Bitcoin. Of course, this will not happen overnight. We will first need to see a more “loose” sale of BTC through these apps, so users can actually obtain real Bitcoin instead of its “paper” representation which cannot be transfered to others.