The past year has been very turbulent for cryptocurrencies – the blockchain and cryptocurrency sectors have made a real breakthrough in development and growth. This trend is obvious, and in several directions – the wider adoption of bitcoin and other cryptocurrencies, the increase in the use of blockchain in various organizations, in addition to the crypt, an increase in attention from regulators.
Blockchain and cryptocurrencies have gone from something experimental and conceptual to a common part of business conversations. However, there are still a lot of uncertainties in this area that create a dynamic market. Making forecasts for the future is always challenging, and doubly challenging for such a rapidly growing field.
Top five trends of 2021
Forbes analysts identify five areas that will play an important role in the crypto industry in the coming months:
- Blockchain going beyond financial services. This is already being observed today. Yes, most of ordinary users still associate blockchain with cryptoassets, but in fact this is a very widespread technology. Blockchain is expected to go mainstream in 2021 and cover a much broader spectrum of the economy – healthcare, logistics, transportation and more.
- Aggravated control and tax enforcement. Given the huge amounts of funds circulating in the world of cryptocurrencies, the state simply cannot fail to pay attention to this potential income. The IRS has already demonstrated its seriousness by taking several steps towards taxing cryptocurrencies, although there are still many technical nuances.
- Central banks of different countries launch their own digital currencies. For example, Sberbank announced that it is ready to create its own stablecoin and has already conducted successful technical tests. This is definitely a new era in finance, although new privacy and security concerns may arise in the implementation process.
- Stopping the growth of bitcoin at a level above $ 30,000. At the time of writing, the currency is valued by the market at $ 39,000, but it is possible that soon we will have a long correction and a season of altcoins, because prices cannot rise forever.
- Popularization of stablecoins. Stable coins are an excellent entry point option for new users who do not want to take risks due to volatility, but at the same time appreciate the high benefits of working with cryptocurrency. Today, the market capitalization of all stablecoins exceeds $ 40 billion.
These are only the main trends, but it is difficult to make specific predictions. But already from this we can draw the main conclusion – the crypt will develop and more firmly enter our life.
Research And Markets Report
Research And Markets, the world’s largest market research marketplace, has published its “Cryptocurrency Market Report: Trends, Forecast and Competitive Analysis.” It covers the time period from 2019 to 2024, and the main idea is that the global cryptocurrency market will grow by about 32% every year.
The future of the crypto market looks promising given the opportunities it presents in p2p payments, money transfers, e-commerce and retail, as well as the media and entertainment industries. Key drivers of this growth are the immutability and transparency that blockchain drives. There has been a high growth in the use of cryptocurrencies in developing countries characterized by strong currency fluctuations.
Risks and Opportunities: Bitcoin Prediction by Ben Caselin
Ben Caselin – head of research and strategy at AAX, the world’s first digital asset exchange based on LSEG technology – also expressed his opinion on the development of the crypto market. He draws an analogy between Bitcoin and gold. Traditionally, gold has been a defensive asset during times of economic turmoil. But today there is every reason to believe that Bitcoin could perform the same function, taking away the market share from gold.
Since October 2020, an outflow of funds from gold and an inflow of them into BTC has been observed. JPMorgan warned that the markets for gold and other precious metals could fall for years to come. Some may be uneasy about this, but Caselin recommends one thing to be understood: while gold carries with it a load of history and tradition, bitcoin is a guide to the future. This is definitely more relevant today than holding on to the centuries-old association with gold.
Specific figures
The past year ended on a very good note: while at the beginning of 2020 bitcoin was worth about $ 7,000, at the end it was worth almost $ 30,000 – an increase of more than 400%. Thus, despite potential corrections throughout the year, many experts expect Bitcoin to close between $ 36,000 and $ 55,000 in 2021.
It is common knowledge that BTC’s bullish rally can be attributed to massive influx of institutional investors and hedge funds. From MicroStrategy, MassMutual, PayPal and more; all these financial giants were actively accumulating digital assets in the fourth quarter of last year. Some of these investors called bitcoin the new gold, and analysts at Guggenheim predicted a future price of $ 400,000. Institutional money is expected to continue to flow into the crypto market in 2021.
DeFi and Ethereum in 2021
Experts from Investig.com also paid attention to altcoins. In particular, decentralized finance gained attention in the past year much earlier than Bitcoin did. DeFi grew phenomenally. The year started with $ 680 million in assets held in this sector and ended at over $ 14 billion.
DeFi is trying to break the line between traditional finance and cryptocurrency. Given the presence in this sector of decentralized exchanges, insurance services, lending, financial derivatives, there is great potential for growth.
A significant proportion of DeFi protocols run on the Ethereum blockchain. Thus, the DeFi boom has led to an increase in the use of Ethereum. This has revived investor interest in this currency and network. In addition, Ethereum has made significant progress as a protocol. The first phase of ETH 2.0 was launched, which will ultimately lead to improved network scalability.
Regulation
Finally, let’s talk about how this will all be regulated. The regulatory framework in relation to the crypto market is expected to be more perfect in 2021. To date, no country has fully defined the regulatory requirements for the functioning of digital assets, although there are attempts. Many centralized exchanges have implemented KYC procedures, but more tightening is likely to be expected.
The fact is that governments around the world would not want to lose control over citizen operations. Cryptocurrencies threaten the control that central banks and other financial institutions now provide to the government. This is one of the reasons for the emergence of digital assets supported by banks and the state.
