- NFT will attract more loyal buyers.
The usage of cryptocurrency will soar to a new height in 2020, and this trend will continue in 2021. Since the beginning of this year, due to the increasing demand of institutional investors,bitcoinIt has reached a record $48,000 and is now hitting $50,000.
This year's cryptocurrency forecast includes:
- participation of more professional traders
The participation of traders engaged in bulk cryptocurrency trading will witness a significant increase in cryptocurrency trading volume and liquidity. This will enhance the credibility of the industry and enhance the confidence of investors. As we all know, the halving of Bitcoin leads to a decrease in supply, which is one of the main reasons for the sharp increase in its price. Institutional investors are transferring their funds from pension funds, mutual funds, hedge funds and corporate reserve funds to cryptocurrencies.
- Stable currencyWill grow faster
Stable currency attracts investors because of its low volatility and diversified investment portfolio. In 2021, the circulation of stable currency will increase by 500%. It can be supported by legal tender, other cryptocurrencies and commodities. The market value of the stable currency will be as high as 100 billion dollars.
Due to the drastic fluctuations in cryptocurrency market, the demand for stable currencies such as USDT,USDC,DAI,BUSD and TUSD has soared. Stable currency can be used as value storage to provide sufficient liquidity. Stable currency is widely accepted in the market and can be traded 24 hours a day. Facebook's stable currency named Diem is expected to be launched this year and will compete with PayPal,Mastercard and Visa. Diem can also easily trade with Bitcoin and altcoin.
- Clearer regulations and tax rules
Governments are expected to adopt more guidelines on cryptocurrency supervision. These provisions will become more streamlined and organized. By paying taxes, cryptocurrency exchange can become a legitimate business, and it will also bring a lot of revenue to the government. The Internal Revenue Service (IRS) requires taxpayers to compulsorily disclose their financial transactions in any virtual currency. In the future, cryptocurrency transactions will be required to share information in a unified and timely manner.
The birth of more new cryptocurrency exchanges
With the active financial support of venture capitalists, entrepreneurs are setting up their own cryptocurrency joint ventures to make them grow and develop in this fast-growing industry. This will lead to better market competition. Users will benefit from updated trading functions and advanced security measures. Up to now, there are 294 different cryptocurrency exchanges in the market, and this number will definitely increase this year.
- More applications of Bitcoin payment
Some big companies such as Paypal, Wal-Mart, Amazon and JP Morgan Chase have adopted cryptocurrency in their daily business. Users can use different digital cash to transfer funds, pay peer-to-peer and purchase various products. It can also be used as a hedge against inflation and stock market decline. Compared with the current popular real world assets (such as real estate and gold), cryptocurrency is regarded as a more feasible investment way.
- Morecentral bankIssue digital cash
In order to enhance the trust and confidence in the authorities, more central banks will plan to develop their own digital cash in 2021 to circulate in the market. This will help prevent the use of cryptocurrencies through illegal activities such as drug smuggling, money laundering and terrorist financing. This will also lead to the traditional financial system becoming more digital.
Countries like China have released the digital version of RMB legal tender and tested it in Shanghai, Beijing and Shenzhen. Digital RMB will compete with mature payment companies such as Alipay and WeChat payment in the Chinese market. At the same time, more than 40 countries are in the experimental stage of digitalization of legal tender.
- DeFi Will become mainstream
DeFi has developed vigorously, with more than 26.5 billion dollars of funds locked in various DeFi projects. The official release of Ethereum 2.0 will help more DeFi solutions to market, which will bring better user experience and stronger network performance without congestion. More collaboration between various projects is expected to ensure greater interoperability in the industry. It is estimated that by 2021, the total value of locked DeFi will rise to 100 billion US dollars, and DeFi tokens will gain more demand in the market.
- NFT will attract more loyal buyers
NFT has created markets in different fields such as sporting goods, artworks and games. It can be used in different industries such as real estate, goods management, media, entertainment and identity management. NFT tokens will win more investors' attention with positive laws and regulations, better technical infrastructure, low transaction costs and higher utilization rate of blockchain technology.
These trends will have a positive impact on the global crypto ecosystem and the confidence of investors, who will remain optimistic before buying cryptocurrencies. Since Bitcoin came out in 2009, cryptocurrency has developed rapidly in this decade. The industry will have to face the problems of data privacy, scalability and regulations of relevant departments in order to seek further development. Now, the market has matured a lot and is highly flexible. Technology infrastructure and loyal user base have been firmly established, and the time is ripe for individuals and enterprises to increase the use of cryptocurrency in 2021.