Throughout 2020 Bitcoin and other crypto assets were observed to achieve quite impressive price increases, crypto adoption has also increased with the number of institutional players joining. The existence of deFi makes many crypto projects with various interesting solutions emerge. 2020 is arguably one of the best years for cryptocurrency. Then how about cryptocurency in 2021?
Here are 10 cryptocurrency predictions in 2021 :
1. China Leads the CBDC
As predicted last year, 2020 is the year for the central bank's digital currency (CBDC). With 80% of the central bank active in the CBDC and invisible pressure from Libra now referred to as Diem, that is expected to launch soon, and is expected to see many new developments in this space.
All eyes in 2021 will be on China as it continues to move forward with its digital renminbi (called DC / EP), which builds the foundation when it comes to the future of money. In its final pilot phase, more than 2 billion RMB worth (US $ 300 million) was transacted through 4 million transactions using digital RMB.
2. Traditional Financial Institutions Looking At Bitcoin
2020 was an extraordinary year when it came to the influx of institutional players in the crypto space. Examples include JPMorgan and Standard Chartered. It is estimated that this will increase in 2021 as many banks start publishing their crypto packages for example DBS Singapore.
Although investment banks are the most active players by far, private banks are also interesting to watch. It is likely that there will be forward-looking private banks to adapt and see crypto as a differentiating offer to attract more clients.
3. Crypto tax clarity
According to the “PWC Global Crypto Report”, more and more tax authorities around the world are providing explicit crypto tax guidance. This has a positive impact on the industry because tax clarity is important to provide comfort for institutional investors.
4. Crypto Unicorn Becomes Crypto Octopus
Despite the economic crisis, 2020 was an impressive year for crypto M&A. Data shows M&A's total crypto value in the first six months of 2020 has surpassed the total from 2019, with the average deal size increasing from $ 19.2 million to $ 45.9 million.
It is predicted that there will be an increase in crypto M&A activity in 2021, especially with the crypto unicorn increasingly becoming the crypto octopus. The percentage of crypto M&A deal activity has so far continued to increase and shift away from America, with 57% of transactions taking place in Asia-Pacific countries, and in Europe, Middle East and Africa in the first half of this year, up from 51% in 2019 and 43 % in 2018.
5. Everyone Easier to Buy Bitcoin
The increasing interest in Bitcoin both among individuals and retail investors is expected to continue next year, then the increasing number of exchanges that provide Bitcoin buying and selling services with cheap and fast deposits will greatly help people to start buying Bitcoin. That way it is not surprising that people will find it easier to get Bitcoin.
6. Traditional Hedge Funds Turn to Crypto
In 2020, large hedge funds, from Guggenheim to Renaissance Technologies, are seriously considering entering the cryptocurrency space, while some of the leading public hedge fund managers, from Paul Tudor Jones to Stanley Druckenmiller, are making headlines by talking about bitcoin as a store of value.
With many regulated and institutional-focused crypto exchanges now happy to serve the fund, as well as major crypto broker solutions. Therefore it is predicted that there will be a potential for an explosion in crypto trading with traditional hedge funds in 2021.
7. Crypto Derivative Exchange is Growing
Another cryptocurrency 2021 prediction is that derivative exchanges will be an area to watch. Open interest in bitcoin futures CME recently hit record highs and will be a good barometer for investor interest in the future.
8. Crypto Industry Getting Professional
Many of the first generation crypto entrepreneurs came from technology backgrounds. But now, many crypto companies are bringing in individuals with institutional financial services backgrounds to run their businesses, the latest examples from crypto companies like BITMEX to new ventures like Diem.
It is expected that this trend will pick up in 2021 especially with the Crypto market that never sleeps, companies operating 24/7 and the industry growing many times faster than traditional financial services, which means executives who jump into crypto will have to operate outside their comfort zone.
9. New Rules Driving DeFi
In 2021, DeFi is likely to grow even further. While it is unlikely that there will be any interest from institutional investors in this sector, the dedicated group of people from the crypto community working in this exciting field will continue to make inroads.
10. Stablecoins have a bigger role in cross-border transactions
2020 was a record year for stablecoins. With assets growing from less than $ 5 billion at the start of the year to more than $ 25 billion in December, this momentum is expected to continue in 2021. Data shows stablecoins use is already increasing in certain corridors, such as between Latin America and Southeast Asia for example, in where traders use stablecoins to complete transactions, completely bypassing traditional banking channels in the process. In 2021, it will be interesting to see if this trend continues.
That's the prediction for cryptocurrency in 2021, again this is only a prediction and not the main reference.
Is this cryptocurency 2021 prediction right? We still have to wait for the answer.
