Even though this challenging 2020 has been an awful year for the world, it became a breakthrough one for the cryptocurrency market. Here I would like to highlight the important trends that will become the main drivers of the crypto growth in 2021.
Institutional investors from S&P500 will continue to join the market
The Block Research 2021 Investor Survey suggests investors are expecting corporates buying bitcoin in 2021. In 2020, we have seen several large purchases, which led to significant price fluctuations. I am confident that this trend will continue, as Bitcoin is the most profitable investment today. This means that the market capitalization will continue to grow.
DeFi market will continue to grow
In 2020, Dapp transaction volumes have surpassed $270 billion with 95% accounted for by Ethereum’s DeFi ecosystem. At the beginning of 2020, many experts predicted the collapse of the industry and compared it to the ICO scam of 2017. However, the fact that 1.7 billion people on the planet are still unable to use traditional financial institutions continues to drive the industry. It seems to me that next year DeFi will transform into a more serious market and maybe even become the part of centralized finance.
NFT revolution
I am quite confident that NFT (unique, non-fungible tokens) will absolutely create a revolution in the world of gaming, art, reality, commodities, financial assets and even fashion! The undoubted advantages of NFT are fast and cheap transactions, NFT interoperability, decentralized storage of metadata. While this asset class is still in its very early stage, the potential is utterly astounding.
Strict security and AML policies
Needless to say, 2020 was the year of hacker attacks - about $ 500 million was stolen by hackers. More than 20% came from DeFi protocols. It looks like regulators will start to pay more attention to DeFi and their compliance requirements. Unaudited smart contracts of projects often have vulnerabilities that attackers can exploit. As for the rest of the losses, 2021 will definitely be the year of rethinking and introducing additional security measures and custodian services. In addition, we very much hope that more and more exchanges will begin to apply AML and KYC policies in practice, which will make a life of scammers very difficult.
Institutions buying ETH
This year was absolutely incredible for Ethereum. First of all, the overwhelming majority of DeFi projects are based on ETH blockchain.
Second of all, the CME Group, the world's leading and most diverse derivatives marketplace, announced it intends to launch Ether futures starting February 8, 2021, pending regulatory review. Minding this news, the price of the second largest cryptocurrency just topped $700 for the first time since May 2018. Third of all, the new mainnet was launched, and despite the fact, it has no functionality yet, the market is super enthusiastic about it.
Second of all, the CME Group, the world's leading and most diverse derivatives marketplace, announced it intends to launch Ether futures starting February 8, 2021, pending regulatory review. Minding this news, the price of the second largest cryptocurrency just topped $700 for the first time since May 2018. Third of all, the new mainnet was launched, and despite the fact, it has no functionality yet, the market is super enthusiastic about it.
Overall, 2020 proved to be an incredible year. A lot of sad and unpleasant events took place this year, but the green market has become the most long-awaited and desired gift for us. We are very pleased that cryptocurrencies are strengthening their positions and the market is becoming more mature and interesting. I wish all readers to always stay on the bright side of cryptocurrencies and believe in a decentralized economy. React less to stupid information noise, rebalance your portfolio, study the fundamental and technical analysis and trade with a cool head.