Crypto market in spring 2021?
The new 2021 has begun with an inspiring surge of bitcoin after some months of being in a relatively stagnant position while slowly losing in price. The big news about Tesla Inc pouring $1.5 billion of its capital into bitcoins, expectedly, launched a new market rally, bringing this crypto to new historical heights. However, this event should be analyzed as a part of a long-term chain of events that happened in 2020. This will allow you to take a look into the future and try to rationalize what it brings. So what will happen in spring 2021 in the world of cryptocurrencies? What should we be aware of? What is on the way for both day traders and holders? Let’s look at a few tendencies that have been around. As always – try to perform your own research and only make decisions on a particular investment with extra caution.
New regulatory frameworks
Since the total cryptocurrency market cap has reached $1.5 trillion with 600 billion of it being bitcoin, governments began watching this field with increased attention. Regulators are concerned not only about money laundering and terrorism financing. Also, there were numerous reports about crypto criminals ranging from fake hedge funds to digital wallet hackers. Not to mention the tendency of cryptocurrencies to steal the dollar’s thunder as the world’s exchange anchor. Because, even now, most fiat exchanges work by the old algorithm of converting input currency first to the dollar and then to the output currency.
The former OCC chief Brian Brooks (also an ex-chief legal officer at Coinbase) told journalists in December 2020 that new regulations for cryptocurrencies in the US will be rolled out within 6 to 8 weeks. That way, by spring we should expect these new regulations to be introduced. He suggested that bitcoin won’t be outlawed. In his final word in public office, Brooks regarded the news about Tesla as “a bit scary”. He acknowledged that the limited amount of bitcoins implies that they won’t inflate too much and thus, present a stable source of value for a long haul. Another US-related regulatory news is that Congress proposed a bill that bans stablecoins except for those approved by the government in order to protect consumers. Let’s see if they pass it in the nearest future.
More institutional investors in bitcoin
The significant purchase of bitcoin by Tesla is not the first one but it’s the most promising of them all, which happened in 2020. Notably, the latest crypto rally ignited by Elon Musk is much different from the bubble that occurred in 2017 and quickly vanished, researchers say. Because, with such amounts of big-league investments from the large multinational companies and “whales” (large individual investors), bitcoin showed a better long term growth rate than gold.
Thus, MicroStrategy who was one of the first crypto investors in 2020 with their $50 million in bitcoin, considered to go all-in. They’ve bought an additional $650 million worth of bitcoins. This event shows the ongoing trend of bitcoin becoming the new security asset for large businesses in the nearest future.
The emergence of central bank digital currencies (CBDCs)
China officially became the first country who implemented the central bank-backed digital currency which they are testing in closed-circuit environments right now. Other governments have also been quite vocal about their explorations of digital currencies. For sure, with trillions of dollars in capitalization, cryptocurrencies are highly unlikely to become banned altogether.
However, government regulators mostly haven’t been making any official claims so far. The only exception is Turkey – they are planning to move forward with a pilot version of their CBDC digital currency in late 2021.
Cryptocurrencies becoming mainstream
Until spring, we might become witnesses of some significant movements towards crypto becoming a means of our daily payments. PayPal has already added cryptocurrencies to its functionality. With their 350 million users and 26 million merchants connected to their services, buying your morning coffee with bitcoin or ether won’t be a fairy-tale anymore.
Another big news is that major mobile tech companies are adding crypto wallets to their native services as well. For example, Apple announced their plans on the new CryptoKit for iOS 13. The app will let third-party developers create a digital signature and public/private key hashes and store it on Apple’s secured chip. The owners of iPhones will be able to instantly exchange payments between each other.
Samsung and HTC also announced their intention to provide users with native cold storage wallets. HTC will launch it on their Exodus 1 and Samsung – on Galaxy 10, respectively. At the moment, Samsung implemented the ability to store Bitcoin, ERC20 from Ethereum, BCH, and XLM.
At the same time, some crypto exchange platforms like cex.io are already offering to secure your assets using their cold storage.
New blockchain technologies
In a way, cryptocurrencies evolve as fast as the technology which supports them. That’s the reason why numerous developers and R&D researchers across the world are actively looking for solutions and breakthroughs.
Here’s a list of the hottest crypto geeks’ talks among the scientific community:
- Replacing Merkle trees with SNARK (non-interactive zero-knowledge proof)
- Resolving Bitcoin scalability problem
- Implementing neural cryptography
- Implementing dynamic self-allocation without requiring a central proof
- Introducing mobile apps with access to hardware crypto wallets
- Connecting crypto wallets to dApps
Some of these tasks as of now have available solutions, others are still in the works. More innovations might appear this spring. Although, most of them are probably going to be gradually developed throughout the whole of 2021 and even further.