What do analysts say about cryptocurrency trading in 2021?

Analysts are hopeful that crypto coins will witness a surge in popularity in 2021 as more and more avenues open up where they can be used, like trade, banking services, and of course, as investments. 2020 had been a tumultuous year but even in the midst of the pandemic, cryptocurrencies and the blockchain network continued to survive and grow. Whether it is the extensive use of the blockchain by different industries or the increased regulatory attention on crypto assets, the trend is in favor of crypto trading.

The past year ended on a rather positive note for digital currencies, especially the Bitcoin. While the Bitcoin had started at a price of about $7000 it underwent an increase by more than 400%, ending 2020 at nearly $30,000. Now the question remains whether this momentum will continue to be there in 2021. The recent Bull Run for the Bitcoin may be because of inflow of hedge funds and institutional investors like Grayscale and Micro Strategy. Many of them hailed the Bitcoin as “new gold” and Guggenheim analysts have predicted its future price to go up to $400k. The automated trading bots like immediate edge have certainly contributed to the rise of Bitcoin trade. The institutional money is likely to flow into all types of digital assets including the Bitcoin. Even traditional finance companies will be open to taking risks through crypto investments.

A big reason that stood in the way of crypto coins turning mainstream was their utility. In short, there were not too many merchants that would accept Bitcoins as payment for goods or services. But this is likely to change and crypto coins will now become far more accessible to end-users and retail investors. Popular payment services such as Square and PayPal are allowing customers to pay using digital currency. In November, Dan Schulman, PayPal’s CEO, informed customers that they would soon be able to sell, buy, and store Bitcoins. In 2021, PayPal will allow crypto coins to become a funding source for transactions being conducted by its 28 billion merchants. Since the user-base and infrastructure are already there, such companies will probably come up with user-friendly interfaces to enable everyday users to jump onto the crypto bandwagon. Even Facebook’s Diem can prove to be a game-changer if it is successful.

The DeFi grew substantially in 2020 and experienced a growth of more than 2000%. This will narrow the differences between traditional finance and unbanked sectors. With departments like insurance, decentralized exchanges, mutual funds, lending, and insurance under DeFi, this is likely to expand even further in the coming months. Since a chunk of DeFi protocols are founded on Ethereum’s blockchain, this DeFi surge will also boost the use of Ethereum. No surprises then why Ethereum also witnessed a surge in 2020; the ETH.20 launch indicates the start of the network’s scalability.

According to experts, Bitcoin is expected to rise above $30,000 in 2021. This seems true given the run-up towards the end of last year. While there is a steady focus on the Bitcoin, stable coins will dominate. CBDCs or central bank digital currencies will also come up but it remains to be seen which country deploys this first. Besides these implementations, the concerns centering on security and privacy will continue to remain. Tax enforcements will also increase; the IRS has earlier made moves to show its seriousness about implementing crypto tax regulations. Finally, the blockchain will go beyond only financial services and extend into the mainstream. Logistics, transportation, and healthcare are only a few of the many sectors where blockchain technologies will find use. So, all in all, it looks that 2021 will continue to see breakout trends for digital assets.

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