- >The Top 5 Trends In Crypto to Watch in 2021
The Top 5 Trends In Crypto to Watch in 2021
Watching the world of cryptocurrency is like watching a stormy sea. There are waves and tides of change sweeping over the globe at an unprecedented rate. It is difficult to know what to pay attention to, and have on your radar. If you are an avid cryptocurrency investor, then paying attention is the difference between a dollar made and a dollar lost. Here are just five trends that are top of mind for us here at CryptoVantage.
Keegan Francis | Dec 31, 2020
1) Bitcoin Stock to Flow
All eyes are on Bitcoin. The world is eagerly waiting to see what Bitcoin will do next. The year of 2020 has certainly been a proving ground of sorts for Bitcoin. Stock to flow analysts have been mapping the price of bitcoin onto the classic Stock to Flow ratio (S2F) chart used to predict the price of gold. To the surprise of many, Bitcoin is tracking the predicted S2F with remarkable accuracy. One of the reasons why there is as much adherence to the curve is the quadrennial inflation rate adjustment (halvening) made by the Bitcoin protocol. It was too early to tell whether or not the halving would have an effect on the price of Bitcoin before May 2020. Now that we are beyond Bitcoin’s third halvening, there does appear to be a concrete pattern emerging from the charts.
If the analysts are correct, then Bitcoin is predicted to reach a price of $100k USD by August 2021. This is what CryptoVantage is watching for. Whether or not we will this rise take place in the next 8 months is yet to be determined. The S2F pattern seems to suggest that this will take place. This next 8 months will really help solidify the whole S2F narrative. Something happening twice is not enough to say there is a pattern. But a third time certainly is enough to warrant significant attention.
2) Project Releases
There are a number of projects that are rolling out their core releases in 2020, into 2021. We’ve been watching a number of them closely to see how the market and community respond. Here are a few worth paying attention to.
The obvious project to pay attention to is Ethereum 2.0. There is so much that is being promised by the core development team. The main thing that we care to point out is how usable the entire ecosystem is for the average individual. It doesn’t appear to us that Ethereum and its dApps are very user friendly, especially for the crypto newbie. One massive reason for this is the humongous transaction fees for interacting with dApps and DeFi projects. We have our eye on when/if Ethereum 2.0 solves this particular problem.
Dubbed “The Ethereum Killer”, Cardano has managed to pick up an impressive amount of momentum. The level of community engagement and voter participation in the space is uncommon in blockchain and cryptocurrency projects. The Cardano foundation has consistently delivered on their milestones, and is steamrolling their way to a full mainnet launch in 2021. By this time, Cardano will contain enough features to compete with Ethereum in a meaningful way.
This business continues to surprise. CryptoVantage has written extensively about Crypto.com over the course of 2020 for many reasons. They quintupled their user base in 2020, making them one of the fastest growing crypto ecosystems in the world. They’ve released their exchange, and their DeFi wallet to the public, giving their user base a plethora of new ways to use their core token CRO. They’ve rolled out their signature VISA Debit card to more countries than any other card on the market. On the other hand the price of the CRO token plummeted more than 60% in the last six months, thanks in part to its controversial decision to merge MCO into CRO and change the tiers related to the Crypto.com debit card.
In 2020, Crypto.com is set to launch their own blockchain to host the bulk of their token’s operations. While many of you may think that Crypto.com Chain will be “just another blockchain”, we’re not so sure just yet. That’s why we’re keeping our eye on what comes out of Crypto.com next.
3) Businesses and Their Cash Reserves
One of the biggest trends driving the Bitcoin price into the stratosphere is the wave of institutional investment. This was of course sparked by MicroStrategies bullish move into Bitcoin in August 2020. It does look like they were at helm of a macro trend. Square followed suit with a $50 million dollar investment of their own.
We are now seeing news on a weekly basis of insurance companies, hedge funds, investment firms, and regular businesses piling into Bitcoin. This in fact, is what the next wave of adoption looks like. The infrastructure required to turn cash into crypto is finally ready to handle untold millions (billions?) of dollars of institutional investment.
4) Central Bank Digital Currencies (CBDCs)
The prospect of having a central bank digital currency tends to excite some, and strike fear into the hearts of others. Those who are concerned about privacy and government hand holding have real cause for concern.
China released their CBDC in April of 2020, signally a scramble for other global leaders to not be left behind. Canada, USA, and several other European nations are all figuring out how to design, build, and deploy their own CBDC’s to remain competitive economically. The reason why this is something to watch, is because each country will end implementing their CBDC in a unique way. Some will focus on privacy, whereas others will prioritize utility.
Whether or not CBDC’s will affect cryptocurrencies is yet to be determined. It is conceivable that CBDC’s can be designed such that they do not permit the purchase of cryptocurrencies at all. So while CBDC’s have the potential to transform society for the better, they also have the ability to be extremely harmful to our rights. Specifically our privacy, and property rights.
5) DeFi Expands Beyond Ethereum
It would seem that the phenomenon of DeFi has predominantly been centralized around the Ethereum blockchain. CryptoVantage would make the case that DeFi started with Bitcoin in 2009, and continues to evolve, but we digress. For the sake of this point, we’re referring to the plethora of lending, borrowing, and swapping protocols that emerged from Ethereum in 2020.
Real use cases have been tried, and proven in 2020, signally both a demand and applicability for DeFi concepts. What CryptoVantage is looking for next, is where will the next wave of DeFi apps pop up? It is our opinion that DeFi should not be, (and won’t be) limited to Ethereum. DeFi app replicas will start to pop up on Cardano, Tron, and Dot. Most interestingly, we may be approaching a time when the Bitcoin Lightning network is capable of hosting DeFi applications.
A DeFi ecosystem hosted on Bitcoin would of course mean that the lightning network is capable of hosting smart contracts. This is worth paying attention to because it could deter people from needing to diversify into ADA, or ETH in order to take advantage of DeFi. One indicator that backs up this claim is the amount of “Wrapped Bitcoin” there is on Ethereum. Wrapped bitcoin is basically tokenized Bitcoin usable on the Ethereum network. Many people have taken to wrapping their bitcoin in order to leverage, or earn a rate of return on their idle bitcoin. A DeFi enabled lightning network would mean that users don’t need to wrap their Bitcoin to participate in DeFi.
Here Comes 2021
Okay, we know that was a lot of information. Realistically, we haven’t even scratched the surface. This is just what is top of mind here at CryptoVantage. Our mission is to simplify the world of cryptocurrency. We do this by providing our readers with up to date, relevant information as it pertains to making investments in the world of cryptocurrency.
As 2020 comes to a close, we want to give you an expectation of what to look out for in the coming year. It is bound to be an exciting one as the bull market is in full swing. Make sure to keep your finger on the CryptoVantage pulse for all the latest updates as these trends manifest themselves in the year 2021.