2020 was a wild year for cryptocurrencies, but 2021 may surprise us all, yet.
Bitcoin has been outperforming nearly all other asset classes, with no signs of stopping, particularly as stimulus programs are beginning to fill the pockets and fuel the hopes of retail investors. With both retail and institutional investors jumping on the crypto trading platform of choice in order to find a spot to buy in on the speculative anomaly of crypto.
Particularly amid concerns of a devalued fiat resulting in a weakened dollar. Leaving millions worldwide to look towards cryptocurrencies like Bitcoin in order to hedge their investments and store values against possible instability. But looking towards Bitcoin as the crypto-gold isn’t necessarily a novel custom– so is it really a good idea to start putting eggs into the crypto basket? Industry pros and leaders are saying yes.
Vigorous Institutional Interest
While seeing names like Visa, MasterCard, and PayPal begin to roll out supportive structures for crypto late 2020 did much to supply some bulls his interest in the tokens, what has happened in Q1 of 2021 has made those players look diminutive in comparison. Even with the $1.5 billion dollar buy up by Tesla aside, Bitcoin has seen a surge in big-name firms showing vested interest in the original crypto.
Blockbusters like JPMorgan, Goldman Sachs, and Morgan Stanley finally stepping in and and contributing to the rising tide of crypto interest. Which gives credence to some bullish sentiment for the future. JPMorgan has reportedly created debt products for the market, allowing investors a way to indirectly associate exposure to cryptocurrencies. Goldman Sachs storms in with news of reopening their crypto desk, which allows users to delve more deeply into futures and non-deliverable forwards.
With familiar faces like Michael Saylor of MicroStrategy and Jack Dorsey of Square coming back for more, buying a reported $15 million and $170 million more in Bitcoin respectively. Seeing such an institutional force behind the coin has many believing that the future of Bitcoin as an asset or store of value, quite bright indeed.
DeFi Platforms May Open Up Further Liquidity
Locking up market liquidity in DeFi pools is one way that investors are keeping bottlenecks at bay when it comes to retail investment on ramps and off ramps. Allowing for a gracious entry and exit without shutting down the liquidity in the market.
The inherent illiquidity of crypto markets was a loudly voiced and long-standing concern of many of the markets’ detractors, giving them the platform, they needed to fuel their bearish outlooks, however, thanks to DeFi liquidity pools, like Ethereum’s Uniswap, investors can now lockup their crypto in DeFi. These liquidity pools are necessary for decentralized financial systems to build layers of functionality on top of. Allowing users and developers both to grow. With decentralized financial tools reproducing at an unprecedented rate, the market more closely begins to resemble that of centralized currencies– something that cryptos like Bitcoin have been vying for since their inception.
These liquidity pools allow for better funding of startup projects, as well as many financial tools like loans and savings accounts. Couple these tools with smart contracts and you have a paradigm that is unique to crypto itself, which could mean greater adoption and farther-reaching use cases in the future.
Volatile Predictions, Volatile Prices
Cryptocurrencies– quite specifically Bitcoin– has long been known for wild price volatility, cascading heights, and crushing lows. But take a peek at the market as a whole, and you’ll easily find that Bitcoin has long been on the upswing, despite regular corrections and bear markets.
While this volatility makes accurate price prediction difficult and the market highly speculative, it is generally something that is favourable for long term bullish sentiments. One metric used to gauge future price predictions for Bitcoin is called S2F (Stock to Flow), a model that has long had shockingly accurate forecasts. Using the S2F model, Bitcoin price estimates for the end of 2021 sit comfortably around $288K. While this number would represent a 400% increase in value compared to present day value, the coin surge by 1000% in value over the course of 2020, making this predicated upswing far less optimistic looking, and much more grounded.
The median prediction for the coin hangs around $100K, with many moderates suggesting the coin should have and retain this value for some time. Not to be without its naysayers, Bitcoin investors have also been told, most notably by Peter Schiff, that it is indeed still about as substantial as a dust mote, and will be seen to hit $0 before the year is done.
However, if Michael Saylor has anything to say about it (and he does) he believes that bitcoin will become the next “monetary energy source” likening owning bitcoin to owing integral assets like water or electricity– promoting a future value of $14 million by the time all is said and done.