Uhm, I am no Harry Houdini or a fortune teller. ‘Doomsayers are the closest to realists’, lol…pun intended. Well, happy new year! Guess I’m yet to say that; officially. 2020, hell of a year! At least we’d have to hold on to the fact that we saw bitcoin trade above $25,000 for the first time ever. Satoshi would be proud; I’m not sure though. The fortune tellers guessed such figures many times, but the doomsayers prevailed for so long.
After a turbulent decade, the alpha cryptocurrency is breaking the rules like it ever did. If you held bitcoin from 2010 to 2020, you might love to share a picture of your mansion(s) and Lambo(s) in the comments section. It’s hard (‘impossible’) to completely explain bitcoin’s outbreak in the last month of 2020, but here we are!
New year, new expectations. It doesn’t always go down as planned. You probably got your bags ready. More bitcoins? Some ethereum? Or you scooped some XRP hoping to fly high? The moon dreams are high each new year; we’ve seen this play out properly for some investors. For many others, it is a totally different story. They probably didn’t do enough research, well not really. Regardless of how much time you spend with researches, cryptocurrency investments are always risky and luck plays a very big role. You certainly, confirmed all of the above if you were active in this space throughout the previous year.
Time to move on, ‘2021 comes with lot of smiles’…that’s a line from a motivational speech anyways. While bitcoin had a good run in the last quarter of 2020, many other projects went the opposite route; probably this will get better in 2021. Tons of thoughts, high expectations, but how could cryptocurrency fare in 2021? Let me guess…
A post pandemic boom?
Waves of negativity spread by the pandemic at its peak led to the biggest cryptocurrency price dip of the year, well, every other digital assets and shares dipped equally. Price of oil dropped to its lowest point ever. A nightmare to world economy. Investors in an attempt to increase their fiat position hit the exchanges to liquidate their investments into a more stable and easily accessible form.
Scared of what is to come, the pressure to liquidate grew amongst investors and contributed significantly to the huge price drop on the onset of the pandemic. Fear, Uncertainty and Doubt accompanied by the effect of the pandemic on certain aspects of life formed the principal crashing forces.
However, the pandemic has revealed some hidden loopholes of humanity. During these days of lockdown, restrictions and grief, we have learnt the biggest lessons of our generation. Things we considered trivial reigned supreme. The internet once again proved to be one of the biggest innovations of the previous and current centuries.
For the first time ever, we have come to realize the actual importance of a flexible means of payment. Digital payment structures are on high demand. Human contact is in its historic lows.
Post pandemic; the world will be more digital as many people have been forced to use the internet more and have discovered the possibilities and what can be achieved using the internet especially as it concerns financial transactions. While the mobile banking facilities have offered some utilities and simplified local financial operations during the pandemic, international financial activities have suffered a huge blow regardless.
The current fiat hyperinflation due to national moves to relief the economic effects of the pandemic have once again undermined the prestige of fiat currencies. The world is likely to seek better options to this system which shaky throughout the tough times.
These shortcomings of contemporary financial institutions may lure the world towards the ‘better alternative’ — cryptocurrency and blockchain technology. Influx of people into the crypto space will surely lead the next boom after the pandemic.
We might be set for another tech boom after the pandemic. If there is one thing the digital asset world learnt from the pandemic, it is the supremacy of cryptocurrencies over other digital/digitized assets. Defi is still ruling the game and it appears to still have some gas in its engine. Defi has been one of the most enticing concepts in the crypto space during the pandemic. With the world economy poised to get better after the pandemic, profits from the recovery may go into cryptocurrencies.
Blockchain (projects) proliferation to continue?
The crypto space grows with each new project that emerges, and with each new concept, the scope of blockchain and cryptocurrency applications also widens, this is evidenced in the rapid growth experienced since 2013 as cryptocurrencies have become one of the notable economic disruption of the past five years.
The number of cryptocurrency projects have grown significantly since 2015 and the trend has continued since then. Till date, the number of new cryptocurrency projects have been overwhelming, one could hardly keep track of them, only few of these new projects are currently listed on popular cryptocurrency trackers, in the real sense, there are over ten (10) thousand cryptocurrency projects currently, this number is even poised to get much bigger with time.
Creating and running cryptocurrency and blockchain projects have been pretty much simplified as the technology has continued to grow. We will probably see an influx of brand-new cryptocurrency and blockchain projects this year. And maybe the death of many old ones, who knows…I’m no fortune teller, remember?
Government regulations to get more intense?
The United States Security and Exchange Commission (SEC) under the chairmanship of Jay Clayton sued Ripple, the company managing the XRP cryptocurrency for indiscriminate financial activities. An event which ushered in an infamous price crash for the (then) third largest cryptocurrency in terms of market capitalization. Ripple, managed by billionaire CEO Brad Garlinghouse, has since then continued to respond to the law suit and also struggling to maintain its project’s progress as investors hit the exchanges to lessen or totally free their stakes in the troubled project.
Exchanges have moved to review their position on the housing and trading of XRP on their platform. Dips after dips, the price hasn’t been fun to watch. Regardless of what happens later, the effect of this law suit on Ripple’s progress could be a show of ‘what could be achieved’ for other regulatory bodies who have had their eyes set on cryptocurrencies and their financial activities.
While Ripple face their law suit, a couple more cryptocurrency project could follow. Ripple’s law suit could usher in an era of court cases for cryptocurrency and blockchain technology. Projects are reviewing their financial activities to stay away from similar issues in the future, but with the eagle’s eye already looking, we might see more court cases in 2021.
Bulls or Bears? Year of ALTs?
Mid quarter of 2020 was pretty good for Altcoins. Altcoins saw massive gains throughout this period as bitcoin and ethereum remained stable for a while. If you held DeFi tokens throughout this time, then you must have had some 2017 feelings. Personally, I had some Loopring (LRC) which made some 10x gains; alright, I know that’s not up to what Aave (LEND) did, but that’s a whooole lot! at least enough for a random investor (like myself) to scream ‘bulls!’.
However, bitcoin won the year as altcoins came crashing while bitcoin and ethereum soared during this time. Fortune tellers who believed 2020 was going to be the ‘year of alts’ had to shift their expectations to 2021. Well, here we are, ALT season or nah? Things looks ripe for alts as bitcoin has had a pretty good year, if the trend should go on as usual, we will probably see things get better for ALT coins and maybe cryptocurrency in general.
One thing is certain, it’s a new year and we have another exciting 350+ days to live through, whatever happens will be exciting to experience. Cryptocurrencies will surely live through the year. Highs or lows, get involved!