The year 2021 will be remembered as a turning point for cryptocurrencies. But what comes next?
Bitcoin has reached a new all-time heavy price, legislative conversations with the possibility to have a significant impact increased institutional buy-in from large firms on the sector. Meanwhile, thanks to everyone from long-time investors like Elon Musk to that kid from high school on Facebook, interest in cryptocurrencies has risen this year, making it a popular topic not only among investors but also in popular culture.
Here’s a rundown of the key characteristics that define the current situation of the sector. You should be aware of the following tendencies to understand where it’s going.
Recap of Crypto Market Trend So Far In 2021
Cryptocurrency Has Faced Regulations
Lawmakers in Washington, D.C., and throughout the world are attempting to devise legislation and rules that would make cryptocurrencies safer for crypto investment and less enticing to hackers.
China declared all cryptocurrency transactions illegal in the nation in September, thus putting a stop to any crypto-related activity within its borders.
The situation is complex in the United States. Chairman of the Federal Reserve, Jerome Powell, has stated that he has “no intention” of outlawing cryptocurrencies in the United States, while SEC Chairman Gary Gensler has constantly stated his agency’s and the Commodity Futures Trading Commission’s roles in monitoring the market.
In already turbulent markets, regulatory pronouncements can have an impact on the current bitcoin price. Because of market volatility, investing professionals advise restricting cryptocurrency investments to less than 5% of your overall portfolio and never investing money you can’t afford to lose.
Beginning of Altcoin
For the first time in April 2021, the value of the cryptocurrency market topped $2 trillion. Because of the growing price of Ethereum and Bitcoin according to bitcoin price prediction, in a short period of time, the value nearly doubled. Both coins reached fresh all-time highs, and Bitcoin’s market capitalization remained at $1 trillion for a week.
BTC continues to lead the market with 65.2 percent, although the figure is down 5.7% from the previous quarter. Altcoins are on the rise right now, and the market is about to enter altcoin season. The key sign of an altcoin-led market is a drop in Bitcoin’s market capitalization in comparison to the entire market capitalization of other crypto assets, resulting in a rise in altcoin prices. As a result, it might be a fantastic way to diversify your altcoin portfolio.
Crypto ETF Will Be Approved
A cryptocurrency ETF would allow investors to acquire cryptocurrencies directly from traditional investing brokerages such as Fidelity or Vanguard, where they may already have accounts.
The SEC has considered ETF clearance several times in recent years, but none have yet been approved, as in other areas like Canada and the EU.
Crypto ETFs are not currently accessible in the United States, but if they are, more Americans will be able to invest in and influence the cryptocurrency market.You can add cryptocurrencies to your wallet directly from the same brokerage that you already have a pension with or other traditional investment accounts, rather than learning how to navigate a cryptocurrency exchange to trade your digital assets.
Big Institutions Are Adopting Crypto
In 2021, mainstream corporations from a variety of industries have expressed interest in cryptocurrency and blockchain, and have even invested in it. AMC, for example, just stated that before the end of the year, it would be able to take Bitcoin payments. PayPal and Square, for example, are banking on cryptocurrency by enabling customers to buy it on their platforms.
Tesla continues to waver on whether or not it would accept Bitcoin payments, despite the fact that the business owns billions in cryptocurrency. Experts believe that this type of buy-in will become more common.
While most consumers don’t see the value in paying for items with cryptocurrency right now, more shops taking payments might change the picture in the future. It will more likely be a long time before spending Bitcoin on products or services is a wise financial move, but more institutional acceptance might open up new use-cases for regular consumers, affecting crypto pricing.
Bitcoin Has Multiple All-Time High Situations
BTC had a 103 percent price return in the first quarter of the year, and it repeatedly reaffirmed its all-time high price points. The following are the primary driving reasons that are propelling Bitcoin to unprecedented heights:
- The inclusion of Bitcoin in exchange-traded funds (ETFs) provides institutional and individual investors with new investing options.
- Institutional investors are entering the market with bitcoin investment, and public firms are purchasing BTC as an inflation hedge (public companies hold 0.95% of total production). The IPO of Coinbase and the broad adoption of the cryptocurrency sector.
- Visa, Mastercard, and PayPal have all adopted cryptocurrency and made crypto payments possible.
- The US central banking system has printed two-thirds as much money in the last six months as it has in the previous 11 years.
These reasons point to the rising demand for Bitcoin, despite the fact that the supply is still restricted to 21 million tokens.
Rising of NFT Market
At the start of 2021, the market for non-fungible tokens (NFT) surged. The entire market capitalization of the NFT reached $27.9 billion, accounting for 10% of worldwide art market sales.
- Collectibles and art, such as Cryptopunk, Hashmasks, and Beeple, account for the majority of NFT sales.
- Sport is the second most popular category. NBA Top Shot and Topps MLB are two of the most popular ventures.
- NFT titles like Axie Infinity, as well as games created on the Enjin and Ultra platforms, account for a significant percentage of revenues.
- NFT sales from the metaverse account for 8% of total NFT sales. A metaverse is a virtual world where individuals may play games, work, and shop.
The NFT market’s popularity isn’t going away anytime soon. The trend is attracting well-known singers, artists, and athletes. Furthermore, individuals are donating NFTs and reselling paintings for millions of dollars. The idea is that every initiative that wants to stand out must either have a unique product or solve NFT-related issues.
Many improvements were introduced in the market at the start of the year, bringing more users on-chain and introducing new blockchain use cases. However, the majority of issues that all users and dApp developers confront are the same: scalability, interoperability, user experience, token price stability, and so on. With so many initiatives and new names appearing every month, the only way for a firm to stand out is to solve the challenges that all market participants face.