Although many industries and companies are under tremendous pressure this year due to the interest rate-related economic crisis, 2020 will be a jubilee year for the key foreign exchange market. There are many signs that this positive trend will continue into 2021. I think these are the 10 trends that will shape the crypto year in 2021.
Five Predictions for Crypto in 2021
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1. Hedge funds and family offices are eager to use cryptocurrency
In 2020, large hedge funds have taken concrete steps to switch to cryptocurrencies, especially Bitcoin. By 2021, it is expected that large investment banks, pension funds, and asset management companies will step into this field and store cryptocurrencies, especially Bitcoin. A large number of regulated traditional financial market solutions (in the form of classical funds and cryptocurrency indexes) are accelerating, and these solutions allow large players to incorporate new cryptographic technologies into their portfolios. Supervised by financial regulators, many crypto changes that are willing to serve such funds, and crypto brokerage solutions (many of which were not the last bull market three years ago) have laid the foundation for a new crypto boom in 2021-trade.
2. Buying Bitcoin has never been easier
The largest stock exchange is Binance, headquartered in Malta, with a daily trading volume of approximately US$9 billion, followed by the US Crypto Exchange Coinbase, with a trading volume of US$2 billion. Both fixed cryptocurrencies can pass financial regulatory agencies Easily buy and tighten Bitcoin. When Bitpanda in Vienna trades about 1.8 million a day, Austria will also participate in the competition.
Buying Bitcoin is easier. Now the risk is much lower and the user-friendliness is high. There are many regulated fiat currency exchanges, and the number of people on this account has increased from 5 million in 2016 to more than 100 million this year. This trend will continue in 2021. This development is also supported by major technology players such as PayPal and Plaza. And from the end of 2020, bitcoin payment transactions will be allowed. By 2021, other payment service providers will follow, which will have a lasting positive impact on the crypto market.
The development of the macroeconomy supports the upward trend of Bitcoin (Bitcoin & Co) because of the high risk of inflation and may cause some states to prohibit citizens from raising funds by themselves. This has increased interest in Bitcoin as a safe store of value. Even Forbes, Bloomberg and Handelsblatt of Germany refer to Bitcoin as “Digital Gold 2.0”.
3. Traditional banks and Bitcoin
2020 is a sign of institutional participants entering the crypto market. Large institutions such as JPMorgan Chase, Deutsche Bank, and Citigroup are developing solutions to purchase cryptocurrency for their customers and are reporting on this new “digital asset” asset class.
Since many banks have already developed blockchain and digital payment solutions in their backends, but are now releasing their encryption plans, this trend is expected to accelerate in 2021. This will ensure that new entrants enter the market and attract conservative companies that will not only be able to invest in the stocks and bonds of their own banks in the future but also have a better understanding of cryptocurrencies starting in 2021.
4. Central bank digital currency: China leads three years
For the central bank’s digital currency (CBDC), 2021 will be an important year. Now, most central banks support CBDC. Digital central bank currency is an important part of the digital revolution. One of the largest central banks is under pressure from two sources: Facebook founder Mark Zuckerberg relies on the digital currency Dieminä (formerly Libra). The currency issued by Zuckerberg, which has 2.4 billion Facebook users, could spread quickly and threaten the local currency systems of countries with weaker economies.
However, by 2021, when the introduction of digital renminbi as a powerful CBDC is rapidly advancing, everyone’s eyes are on China. During the 2020 pilot phase, more than 2 billion yuan (300 million US dollars) were processed in more than 4 million digital yuan transactions. The question is not how fast China will advance the project.
5. DeFi (Decentralized Finance) may continue to grow in 2021.
In 2020, Decentralized Finance has experienced a boom, which reminds people of ICOs in previous years. Decentralized finance, referred to as DeFi, represents the connection of classic financial concepts and banking products with blockchain technology. DeFi is about transferring the principles of the financial world to cryptocurrency and distributed ledger technology.
At present, Decentralized Fiance is only suitable for experts and encryption fans who have studied the content in-depth. Institutional investors are still excluding DeFi in 2021 and are developing on the sidelines.