How is the cryptocurrency industry expected to be in 2021?

By February 10, 20212 Comments

2020 has not been a great year for all of us on the occasion of the global Covid 19 pandemic. But it has been one of the most remarkable years for the crypto industry, with a high rate of adoption, Bitcoin reaching its ATH along with other altcoins, more CBDCs and institutional investors coming in, and many more.

Numerous reports show Bitcoin going mainstream in the years to come. Santiment, a crypto survey website shows $11.5 trillion spot volume for Bitcoin itself while $92.5 billion for DEX volume. As per a survey conducted by the Devere group, 73% will own Bitcoin by 2022. As per AssetDash, Bitcoin is the 9th most valuable asset in the world, as per market capitalization. The technology behind cryptocurrency, i.e., Blockchain might add $1.76 trillion to global GDP in 10 years. Even Google trends show ‘Bitcoin’ searches at 2020 high, in which South Africa contributed the most. Recently a popular rapper announced a $1 million giveaway on Twitter in partnership with Square’s Cash App.

Note: This blog post is also available as an infographic

Top Crypto Moments in 2020, Indicating Optimistic Approach in Adoption

  • Institutions
    Several institutional investors are hopping into the crypto space, like Billionaire hedge fund investor Druckenmiller owning crypto and betting against USD and celebrity Jim Cramer buying BTC. Guggenheim partners to fund $500 million to Grayscale’s GBTC. Another big news added to the list is S&P Dow Jones, a major financial data firm announcing to launch crypto indexes in 2021. Even Cboe plans on doing the same. Gazprombank Switzerland, a subsidiary of one of the largest banks in Russia, debuts Bitcoin trading. U.S.- based asset manager, Digital Asset Investment Management, or DAiM, has launched the country’s first employer-sponsored 401K retirement plans supporting Bitcoin. There are other advancements in terms of institutional adoption, like Singapore bank DBS to launch a digital exchange, Bakkt finally getting launched after several delays, and Banca Generali invests in Bitcoin custody service.

Job Opportunities in Crypto/Blockchain

As per Linkedin Survey, Blockchain is the top skill for 2020, which is creating high-paid jobs worldwide. Recently, Spotify came up with a job listing for the role of an Associate Director to lead FB’s Libra project. Not only that, an artist earned $1 million for his ETH-based artwork.

Now let’s talk about the most discussed topic – Regulation

Most of the developed world has adopted a positive regulatory stance towards Bitcoin and Crypto. Right from the G7 to various departments of the US government like FATF and OCC issuing guidelines. Major countries like  China, Russia, the EU, Canada, and France issued statements regarding the same. Even the rest of the world, including South American countries like Mexico, Brazil, and Argentina, along with Asian countries like Vietnam, Singapore, and Japan, have started working on regulating cryptocurrencies.
Although India has not clarified its stand on crypto as yet, the community is pushing for a regulatory sandbox.

Top Tech Trends in 2020

When it comes to technology trends, there are quite a few of them which tops the list:

  1. ETH 2.0
    The most awaited technological update happened on December 1, i.e., the first generation of Proof-of-Stake (PoS) Ethereum 2.0 went live. More than $1 billion ether locked in ETH 2.0. This can lead to faster blockchain adoption.

  2. DeFi (Decentralized Finance)
    Decentralized Finance (DeFi) emerges as the most popular technology of 2020. DeFi leverages the blockchain’s decentralization principles and enables not just democratized money, but democratized financial systems, products, and more.You can check the total value locked and market dominance here. The most recent news is Compund Labs’ new blockchain readies DeFi for CBDC. As per the recent report, DeFi boom drove a 1200% increase in Dapp volume in 2020 and will form the foundation of the crypto economy in 2021.

  3. STO (Security Token Offering)
    Security Token Offerings or STO has become a prominent trend in the crypto space. In simple terms, a security token represents the ownership information of the investment product, recorded on a blockchain. As per recent news, SBI is planning to run its own STO allotting shares of SBI e-Sports. Even global exchanges like Huobi joined Japan’s STO association to streamline “the transaction of security tokens”.

  4. NFT (Non-Fungible Token)
    Non-fungibility simply means the tokens are unique and indivisible, and the possible use cases of this technology are endless. Most NFTs are built on Ethereum using the ERC-721 token standard. FC Barcelona footballer invests $4.3 million in a Non-fungible token (NFT) site. Even a musician named Guy J sold NFT, bringing royalty rights for $26K in crypto. As per Dapp.com, NFT market is booming, where it reached a 30-day volume of $10.5 million, which is 115% growth from November.

  5. Libra
    Facebook’s Libra is another most awaited project to come up in the crypto space and is ready to launch in January 2021. Facebook unveiled the libra project in June last year, which was scaled down after being scrutinized by regulators worldwide. Libra is changing its name to Diem association. This time, it’s even preparing to launch with a single cryptocurrency, a scaled-down version of its original plan. Facebook even plans on launching its crypto wallet in 2021.

  6. Gaming
    Blockchain and crypto play an eminent role in the gaming sector. September 2020 saw the highest daily active users playing games across the blockchain, which is 23,467. Other updates in the crypto gaming space include Poker network giving 90% of the payouts in BTC, Japanese esports company to pay their players in XRP, and Microsoft, EY to use blockchain for gaming rights to include payments. WarnerMedia, one of the major media players, is joining the blockchain gaming ecosystem via its subsidiary, Turner Sports.

Investors Preferring BTC over Gold or Other Assets

2020 is all about Bitcoin and how it is one of the best-performing assets. Many investors are adding Bitcoin to their portfolio like Morgan Stanley executive Ruchir Sharma prefers Bitcoin over gold, UK investment manager shifts his allocation to BTC from gold. Michael Saylor, CEO, Microstrategy, said – ‘Cash is trash, so let’s bet $425 million on Bitcoin’.

What to Expect in 2021?

CBDC (Central Bank Digital Currency)

Most of the countries and institutions are coming up with their own currency. As per the Circle CEO, hundreds of millions of consumers will use digital currencies in the future. Major places like Europe, Japan, Lebanon, and Canada to decide on their CBDCs in 2021. The French central bank chief eyes partnership for possible digital Euro and even Banque de France tests digital Euro CBDC. Russia considers digital Ruble, and Sberbank also plans its own CBDC. Singapore and Australia work on wholesale CBDC project. On the other hand, Spain and New Zealand are still weighing digital currency design proposals.

2021 – The Crypto Savvy Year

2021 predictions by crypto influencers are making rounds all over. ShapeShift CEO Erik Voorhees believes every asset manager must understand Bitcoin. OECD tax director reveals that international crypto tax standards are coming in 2021. Blockchain adoption is also making heads turn as Hashgraph CTO expects it to grow even bigger next year. As per the Australian government, all Fintech companies will use blockchain within 10 years. CME to enter Ether futures next year and Toronto Exchange to support ETF.

2021 Price Prediction by Market Leaders

Crypto market is all about speculations based on certain factors. Most market leaders have come up with their predictions on Bitcoin price and how the crypto industry might look. Bloomberg analyst predicts $1 trillion market cap for Bitcoin, Gold bug predicts 2021 to be a great year for Bitcoin and Ethereum. JP Morgan states that Gold might suffer as investors are shifting to BTC. Morgan Stanley executive is actively making a case for BTC to become a global reserve currency.

There are various optimistic price predictions by an on-chain analyst, Gold industry insider – Dan Tapiero, Citibank analyst, and Winklevoss twins. Other crypto influencers like Tone Vays, Mike Novogratz, Rich dad poor dad author – Robert Kiyosaki, and Macro investor – Raoul Pal predicted crypto to surpass $50K. Other investors like Paul Tudor, Marcus Swanepoel, and BlackRock CEO are also taking an active interest in Bitcoin.

Institutional Investors in Crypto

The most prominent names are Ruffer, MicroStrategy, Stone Ridge, and Grayscale when it comes to institutional investors. With nearly 20% of the users already have purchased Bitcoin, PayPal’s entry into the crypto market led to a 17% stock surge. As per reports, corporations like BlackRock, Galaxy, and others hold $15.3 billion in BTC.

India’s Contribution to Crypto Adoption – What does 2021 look like?

The Supreme Court of India lifted the banking ban on cryptocurrencies on March, 2020.

Very recently, on February, 1, 2021, the Parliament passed a crypto bill named ‘The Cryptocurrency and Regulation of Official Digital Currency Bill, 2021″ – which created FUD in the Indian crypto ecosystem. 

But here’s why we should not panic.

The cryptocurrency exchanges in India have united to launch campaigns to avert the potential crypto ban. More than 15K people already sent their email to their local MPs to bring positive crypto regulations. Go here to do your part.

Note: This blog post is also available as an infographic

Disclaimer: Cryptocurrency is not a legal tender and is currently unregulated. Kindly ensure that you undertake sufficient risk assessment when trading cryptocurrencies as they are often subject to high price volatility. The information provided in this section doesn't represent any investment advice or WazirX's official position. WazirX reserves the right in its sole discretion to amend or change this blog post at any time and for any reasons without prior notice.
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