January of 2021 was eventful, to say the least. Many are already comparing the events of the past month with the volatile year of 2020, which so Bitcoin go as low as $4000 and as high as $28.000. However, all experienced investors have been waiting patiently for 2021, the year that we supposedly see massive growth if historical patterns prove to repeat themselves.
While retail interest is spiking once again and institutions buy Bitcoin with their cash reserves, we are seeing several trends building up this year. By observing and following these trends closely, you will be able to discover profitable opportunities as well as market gaps that can turn into new crypto products. Let’s see what we can expect to see in 2021 and beyond.
Institutional adoption is underway
Since September 2020 we have experienced a massive surge in institutional interest, and the trend keeps on growing. The reason behind the sudden interest of companies is Bitcoin can be linked to the financial instabilities of our economy, and the bailout packages that “weaken” the US dollar. With more than $10 trillion printed globally, we can expect inflation rates to reach double digits on an annual basis for several years to come.
Michael Saylor, founder of MicroStrategy saw this early enough and converted the whole balance sheet of his public company into BTC Currently holding more than 71.000 Bitcoin, Saylor and Microstrategy are now educating corporates on the benefits of adopting a Bitcoin standard by converting their cash reserves. Just a few days ago, the founder held a live conference that was attended by representatives of SpaceX, Starbucks, Delloite, ABC News, and more.
Growth of Defi
Decentralized Financial applications are nothing new in the crypto industry. However, we experienced a massive surge of interest in such products during the summer of 2020. As a result, we saw Bitcoin spiking temporarily, while the price of Ethereum grew more steadily.
DeFi aims to replace all traditional financial products that operate through “trusted” third parties with financial products that operate through code. These also offer a lot higher interest rates by providing liquidity to token pools and are thus the preferred choice of investors that want to earn passive income. At the moment, there is more than $20 billion dollars locked in DeFi products, and we expect the number to exceed $100 billion by the end of the year.
Growth of crypto options
Derivatives products and more specifically cryptocurrency options trading exploded in popularity over the past few months, as we saw investors gamble for Bitcoin’s growth in the next few months in order to profit accordingly. While these more traditional financial products are mostly used by investors of different financial markets, we expect options trading to grow massively in 2021, as Bitcoin continues to grow in value.
Increased regulations
The bigger Bitcoin becomes, the harder is becomes to control. And the government tends to dislike what they cannot control. The new secretary of the treasury reserve, Janet Yellen called for increased regulations on Bitcoin and cryptocurrency trading, while Christine Lagarde referred to Bitcoin as a way to conduct “funny business”.
The claims related to money laundering and criminal activity are of course false (as Chainalysis report shows), but it is the only way the government can justify heavy regulations that may be imposed within 2021. Even with increased regulatory scrutiny, however, Bitcoin will not stop growing, as many governments all over the globe are already mining the popular cryptocurrency.
NFTs will continue to grow
Non-fungible tokens will continue to grow and capture market share, as we are slowly starting to see the digitization of everything that holds value. At the moment, the industry that benefits most from this shift is that of art, but we can expect the gaming sector to catch up soon as well. The tiny market that holds approximately $100 million USD became more popular in the final quarter of 2020 when Anthony Pompliano dedicated one of his newsletter to the upcoming trend.
With artists finally finding a way to monetize their work online, we will see a massive surge of interest from both collectors and creators alike.
Never exit crypto - Pay with crypto debit cards
Binance recently announced the creation of Binance Pay, a section within their website dedicated to different types of financial products.
Among these is also the Binance debit card, a cryptocurrency card that allows users to spend their crypto in any store that has a POS device. All users need to do is allocate a part of their spot wallet funds into the dedicated section of their crypto wallet and start spending funds on any purchases they want.
Soon enough, spending crypto will be as easy as spending FIAT currencies, and 2021 may be the year these products finally go mainstream.
