The year 2020 is coming to an end, and it has been rather beneficial for the cryptocurrency sector. Despite ever stricter regulations, Bitcoin (BTC) and altcoins have been able to show their strength in times of crisis, and new sectors of the blockchain have emerged. We take stock of the upcoming trends for 2021.
- The challenge will consolidate to propose viable financial alternatives
The most dynamic field of cryptos in 2020 is of course decentralised finance (DeFi). The explosion of the sector in the summer raised fears of an “ICO effect”. Some analysts predicted the fall of this sector, which is still largely driven by the greed of investors willing to risk everything to cash in exponential gains.
But as 2021 approaches, consolidation begins for the sector. It survived a drop in capitalizations and volumes when enthusiasm waned. Today, the DeFi sector accounts for more than $14 billion locked in protocols.
And the best indicator of this interest is all the projects that are doing it too. Altcoins like Dash (DASH) or Zcash (ZEC) release their “Wrapped” version to be used on Ethereum… And even Cardano (ADA) plans to release a DeFi platform. This remains the largest sector to watch in 2021.
2. Future inflation will be favorable to Bitcoin (BTC) and altcoins
The global health crisis this year has snowballed. Major economies have pulled out the trains to support economies weakened by containment. In the United States, the money board has been running at full speed, raising fears for the future of the dollar (USD). Most analysts conclude that the economic crisis and future inflation could be much worse than what the world experienced in 2008.
In the face of this, investors of all stripes have sought refuge in alternative assets. And it benefited Bitcoin (BTC) and the altcoins. After a historic crash in March, the BTC surpassed its all-time high a few weeks ago.
The arrival of major investors, such as MicroStrategy and Square, has also solidified the position of the asset. And this is just the beginning, if we believe the desires of institutional investors. Bitcoin is therefore expected to continue to be considered a safe haven in 2021.
3. Central Bank digital currencies will take center stage
After many months of balking, the central banks of major economies began to develop their own digital currencies (MNBC). China is currently the most advanced in its digital yuan project, and it has forced other countries to take the train en route.
In Europe, Christine Lagarde confirmed that a decision would be taken for the digital euro in January. And even the UK ended up confirming its plans for an MNBC. On the whole, governments are still cautious and are talking about long tests to come. But if China’s digital currency spreads widely, it will force them to accelerate again…
4. Non-fungible tokens (NFT) will explode in 2021
Initially mainly used for blockchain video games, non-fungible tokens are gradually finding a wide use. However, they continue to break records in the digital real estate industry, with games like The Sandbox selling like hotcakes.
But new uses continue to develop. Digital works of art are booming. Last October, a work called “Bitcoin 21” was sold by Christie’s for $131,250. The trend is therefore expected to continue in 2021.
5. In 2021, Ethereum will continue to break records
The big news of 2021 will also of course be the move to Ethereum 2.0. After months of waiting, Ethereum has finally begun its transformation to the Proof-of-Stake. And for now, success is on the agenda. At the beginning of December, it was reported that 1 million ETHs were now “stakés” on the Beacon Chain. But it will be several years before this transformation is completed.
In any case, Ethereum has finally managed to become a multiple platform, which is running an ever-increasing number of smart contracts – it has had a boost from DeFi. Today, the value transferred each year to Ethereum exceeds that of PayPal… It’s enough to approach 2021 with enthusiasm.