2021 would be a year of opportunity and challenge for the cryptocurrency market

Photo by Nadin Mario on Unsplash

Although 2020 may be a bad year for the world due to the Covid-19 epidemic, it is a breakthrough year for the cryptocurrency market. 2021, the world hopes that this year will be a better year, although there is no telling what the final outcome will be. However, for the cryptocurrency market, 2021 may be a year full of more challenges and opportunities.

Institutional investors in traditional finance will continue to enter the market

According to Block Research’s 2021 Investor Survey, more institutional investors in the traditional financial sector say they will buy bitcoin in 2021, and the data shows that some traditional businesses also want to be able to legally own bitcoin through investment institutions.

In 2020, we saw institutional investors in the traditional financial sector buying large amounts of bitcoin in the market, which led to significant volatility in the price of bitcoin. There is no doubt that this trend will continue in 2021, as Bitcoin has proven to be the most profitable investment in all markets today. And continued institutional buying will mean that the Bitcoin market cap will continue to grow.

DeFi market will continue to grow

In 2020, Dapp transactions across the cryptocurrency market have exceeded $270 billion, and the DeFi ecosystem of Ethereum accounts for 95% of that.

In early 2020, many investors were not bullish on the DEFI market and compared it to the short-lived ICO of 2017 and believed that the future of DEFI was headed for collapse. However, the fact that there are still 1.7 billion people on the planet without access to traditional financial institutions continues to drive DEFI as an industry.

DEFI is not speculation, it is financial behavior that actually happens. In 2021, DeFi will become a more mature financial market and may even become part of centralized finance.

The NFT Revolution

NFT market volume grows 785% to $78 million in 2020. Sky-high NFT works are emerging, and crypto art has become a new starting point for value investment. Whether it’s collecting, auctioning, or opening blind boxes, DeFi liquidity mining, NFT has various ways to play. Celebrities are entering the game and it has become a vehicle for cross-border cooperation.

2021, the NFT story is still being continued. NBA TopShot keeps setting records for trading volume; Enjin achieves compliance in Japan and launches NFT charity project with local KOLs; NFT Index Fund makes NFT Investing becomes easier; Carl Cox, a well-known British DJ, will launch NFT in collaboration with artist Hipworth; My Neighbor Alice, an NFT game, closes $2.1 million in funding.

I believe NFT (unique, unfungible tokens) will definitely create a revolution in gaming, art, reality, commodities, financial assets and even fashion! Although NFT as an asset class is still in its very early stages, its potential is amazing.

A more secure and compliant cryptocurrency market

There is no doubt that 2020 is also a year of hacking, with approximately $500 million stolen by hackers, 20% of which comes from DeFi projects, where unaudited smart contracts often have vulnerabilities that hackers can exploit to make large profits. And in 2021, not only blockchain practitioners but also government regulators are starting to pay more attention to DeFi and its compliance requirements, according to a survey.

2021 will certainly be the year when blockchain will reconsider and introduce other security protections And in reality, the job of custody services is already being opened up to investors by some traditional commercial banks.

ETH will be favored by more investment institutions

The year 2020 was absolutely incredible for Ethereum. First, the vast majority of DeFi projects are based on the ETH blockchain. Second, the CME Group, the world’s leading and most diverse derivatives marketplace, announced plans to launch Ether futures from February 8, 2021, pending regulatory review. And with the release of ETH 2.0, the market is sure to react to it afterward.

For the cryptocurrency market, 2020 was proved to be an incredible year. A lot of sad and unpleasant things happened this year, but the big bull market we were most looking forward to and longing for has arrived.

At the same time, we are very happy to see that cryptocurrencies are strengthening their position and the market is becoming more mature.

For investors, in 2021, rebalance your portfolio, study fundamentals and technical analysis, then trade with a cool head and move forward with certainty in the cryptocurrency market, and your 2021 is sure to be even brighter.

Article from Odaily

Translated by Yang(Mengyan Finance)

To translate some latest policy and issues on blockchain and fintech happened in China