“The Year 2020 will be known as a year of All-Encompassing Growth of the Crypto Universe. It will go down as one of the most important years that catapulted cryptocurrencies to greater heights.”
– The Hashant Team
For many reasons, 2020 proved an excellent year for the entire crypto-universe. While on January 1, 2021, the combined market capitalization of all cryptocurrencies together was hovering around the mark of $192 billion, it grew by more than three times to a size of more than $ 660 billion by the end of 2020. One can not deny that much of this growth was driven by the fierce bull run of Bitcoin, which was sustained throughout the year. At present, in terms of market capitalization, the dominance of Bitcoin is nearly 70% of the overall crypto market. Bitcoin, on January 1, 2020, was priced a little above $7,220. Owing to the extended bull run it has been witnessing since the middle of march, the price has now crossed the mark of $26,000.
A confluence of multiple factors has been responsible for augmenting this growth for Bitcoin. Decreasing confidence in traditional money market investment instruments, the growing participation of institutional investors in the crypto market to hedge their assets against digital holdings, the collaboration of Bitcoin and other cryptos with large payments service providers like PayPal and Square, and the halving of Bitcoin this year have been some of the most important factors. However, it would be a limited understanding of the situation to see this growth as an entirely Bitcoin-centric one.
Many other cryptocurrencies witnessed significant appreciation in their prices and considerable growth in market capitalization. For instance, Litecoin was rallying around $42 on 1st January 2020. On 25th December, the price of Litecoin crossed $120, a three-times growth in prices within a year. The price of Ethereum was hovering around $131 on 1st January 2020. On 25th December, Ethereum’s trading price crossed the mark of $627, a nearly five-times growth. These numbers show that 2020 was not only a year of significant growth for Bitcoin but a year of remarkable upsurges for most of the major cryptocurrencies.
Now, with 2020 coming to an end, the question that investors, crypto-enthusiasts, and general observers alike are bothered about is how 2021 will turn out for the crypto-universe? Will the growth continue? , and Which of the projects will make the most out of this upsurge?
We will find answers to these questions in the next segment.
What to Expect in 2021?
#1. Bitcoin’s Prices Will Grow Further
Industry experts believe that the price of Bitcoin will continue to rise in 2021. Some of the investment firm executives are expecting the price of Bitcoin to go past $100,000. Along with Bitcoin, these analysts also expect the price of Ethereum to cross $2,000. According to these analysts, exchange owners, and institutional fund managers, the institutional buyers will continue to drive the growth for Bitcoin. There are also projections of publicly listed companies, such as Tesla, making Bitcoin a part of their official investment plans. Even many of the central banks of influential global economies will make a foray into the crypto-universe by announcing substantial positions in Bitcoin in 2021. However, some analysts are not hopeful about the future potential of crypto assets. They believe that this astounding growth in cryptocurrencies in 2020 will attract increased attention from regulatory bodies in the days to come. Although such speculations give rise to the probability of a stymied growth, the number of believers in the growth potential of Bitcoin far outweighs the ones who think the opposite.
#2. Increasing Prominence of Yield Farming
Experts also see the field of liquidity mining or aggregated yield farming to continue its growth in 2021. The stupendous growth in the value of several yield farming platforms’ governance tokens indicates that investors’ interest in liquidity mining is not going to flat out anytime soon. In January 2021, the total locked value in such DeFi Platforms, ones that provided significant returns and incentives to their liquidity-supplying users, was $1 billion. This value increased to $15 billion by the time it was the month of August. There are various valid reasons to assume that this upsurge, driven by many upcoming and exciting DeFi protocols, will only grow in 2021.
#3. Non-Fungible Tokens in Gaming
2020 was not a particularly promising year for the application of blockchain or cryptocurrencies in the field of gaming. However, people showed some interest in exploring non-fungible tokens or NFTs in gaming in 2020. Experts believe that this is one area that will witness tremendous growth in 2021. Several famous and market-leading gaming platforms will be exploring the use of blockchain in gaming on a much larger scale in 2021. Users will increasingly participate in blockchain gaming to monetize their digital assets via the blockchain.
#4. Increasing Number of new Projects
All these developments, anticipated to happen in 2021, will drive structural growth in the realm of cryptocurrencies. Several infrastructural projects will attempt to make the scaling up of blockchain technology easier and convenient for the developers. Among them are projects that will provide managed hosting services for blockchain networks, similar to what Amazon Web Services do for cloud infrastructure.
The Web3.0 infrastructural development tools will equip developers with off-chain storage DApps. New API ecosystems will come up with an aim at bringing blockchain-native oracles into the scene. Options will increase for developers to analyze data with enhanced security and user privacy. Overall, more and more developers will be leveraging these developments. It will result in a reduction of the complexity of development and increase the applicability of their decentralized applications.
Overall, 2021 is set to become a year of growth, expansion, and innovation in the crypto universe. Both stakeholders of the crypto market, the investors and the developers will experience a proliferation in their returns. Reports of such growth will play a crucial role in making more mainstream investors interested to join the crypto bandwagon.
We wish you all a Happy New Year with prosperity and success to you and your family.
Happy New Year 2021
-The Hashant Team