Digital currency markets have skyrocketed significantly in value all year long, other than the gloomy global economy along with the aftermath of covid-19 responses. The prices of Bitcoin have been hovering at amounts not witnessed since 2017, plus the top Crypto asset in terms of market cap happened to gain a whopping 159% since January 5, 2020. Moreover, various cryptocurrency assets have witnessed spectacular 12-month returns.
Bitcoin happened to graduate from the digital assets playground to mainstream global investment. investors presently have the means and knowledge to purchase Bitcoin themselves, and people are witnessing it in real-time, which happened quicker than expected. Pretty soon, investors will particularly look out on digital asset hedge fund strategies and don’t own any Bitcoin because they look forward to funding managers for providing them with the exposure to digital assets that they cannot purchase themselves or don’t know to exist. As a consequence, that happens to be a good chance that actively managed passive indexes and hedge funds, built around high allocations to Bitcoin, possess a pretty short shelf life.
2020 has been out of one’s mind, to state the least, and while the economies worldwide happen to shudder, the cryptocurrency economy happens to be thriving. The nation-states’ responses to the pandemic along with covid-19 has entailed shutting down huge sections of the worldwide economy and locking down wholesome citizens, wreaking financial havoc on the public. Apart from that, equities bonds, stocks, and the plethora of conventional commodities lost notable value. On March 12, 2020, the bottom dropped out on all, including digital asset markets.
With that being stated, when it comes to cryptocurrency markets, Crypto markets have persevered. Various digital assets have outperformed approximately every traditional investment under the sun. Moreover, as per reports, Bitcoin was trading for 7411 dollars per coin on 5th January 2020 and has since gained 159% to date. Here are some of the other key highlights for cryptocurrency this year.
The price of Bitcoin burst through its all-time high of $20,000 at the end of November. Bitcoin has been traded the last time at these levels approximately 3 years before, however, the Crypto space has evolved notably since 2017, and Bitcoin happens to be revealing its lasting power. At the beginning of the covid-19 pandemic, fiat and cryptocurrency markets followed pretty similar trajectories throughout the worldwide sell-off.
Followed by Bitcoin price increment in the same direction as gold, a shift preceded, bolstering the perspective that Bitcoin happens to be an emerging safe-haven asset, thereby the coupling from the conventional markets. Ever since the price of Bitcoin has been rising. As per reports, there have been recording surges in volumes on crypto exchange platforms and they have been witnessing sustained levels of new customers throughout 2020.
2020 has been one of the most difficult years in modern times. The worldwide pandemic that started in the year 2019 has presently affected 65 million people throughout the world, leading to 1.5 million deaths.
It has made people change the way they live their lives, from how and where they work, shelter in the home, children’s schooling to how they communicate in local communities, and many more. With all the heartache and pain, something happened throughout the way. Eyes were opened and society witnessed from policymakers and Central bankers in 2020 creating one of the most notable catalysts of interest for Digital assets.
While 2020 was one of the most significant years for Bitcoin adoption, the reimagining of conventional financial operations like borrowing, lending, and collateralization performed via decentralized protocols have also been increased.
South Africa happens to rank third worldwide in Crypto ownership with the primary use case being speculation and investment rather than utilizing cryptocurrency for making payments. As far as 2020 is concerned, there remained different opinions on whether Bitcoin happens to be a safe haven asset or not. Various analysts predicted a flight to Bitcoin throughout the worldwide market sell-off, however, declined initially when stock market investors liquidated their investments for accessing cash.
From another perspective, it can be said that investors diverted to alternative assets like gold and Bitcoin in times of economic uncertainties for diversifying their investments. Bitcoin has itself shown to be resilient within the first Global crisis. Outperforming traditional markets like the S&P 500 and gold in 2020, Bitcoin indicates that cryptocurrency is capable of decoupling from macroeconomic movements. The rally of 2020 differs from previous bull runs in 2017, where the first one happened to be largely driven by retail investor’s fear of missing out. In 2020, sophisticated investors happen to be taking off longer positions.
The covid-19 worldwide crisis seems to have caused various fund managers to re-evaluate their attitude towards Crypto. Organizational professionals stated that Crypto has longer with it being an asset class. Institutional investors happen to be discovering new ways for incorporating digital assets into their strategies which signifies a key indicator, concerning a maturing marketplace.
Approaching the end of 2020, various headlines rocked the Crypto world. Perhaps, the biggest news was that PayPal partnered with Paxos for bringing Crypto functionality to its 300 million users. While their service was restricted to only a few large-cap coins, such as Litecoin, ether, Bitcoin, and Bitcoin Cash, it led to a new Bitcoin rally and reignited a unification concerning the mass adoption of digital assets. As far as crossing the threshold in 2021 is concerned, this renewed confidence will only proceed to gain momentum.
With participation from the biggest names in traditional Finance, 2021 will witness limitless possibilities and additional news of high net worth people betting on Bitcoin. While Bitcoin trading has not reached a volume where it happens to be stable enough to be considered as a true safe asset like gold, Bitcoin has and will proceed to reveal more and more inflation resistant characteristics. It is expected that cryptocurrencies along with Bitcoin will be decoupling from conventional assets which might drive more institutional for adding Bitcoin to their treasuries.
Though Bitcoin happens to be the undisputed king of Crypto and comes with an ability to empower people through its uncensorable, decentralized monetary systems, stablecoins have arrived as a necessary tool to broaden the social and economic aims. Within the emerging Crypto world, stablecoins have proved to signify a hedge against inflation and volatility.
It was witnessed by growing utilization in South Africa, Turkey, and Nigeria. Stablecoins pegged upon stronger currencies, such as Euro or the US dollar, that will proceed to help preserve the wealth of people who do not look forward to exposing themselves to the volatility of foreign Crypto like ether of Bitcoin. It is one of those trends that people expect to proceed unfolding. The explosive development of stablecoins will act as an additive for Central banks globally for continuing development and research of creating Central Bank digital currencies.
The 2020 global pandemic forced brands, artists and creators to rethink their engagement and fan monetization strategies. Many turned to live streaming and virtual engagements. Others attempted to double down on monetizing their social media handles like Twitch or YouTube.
In the Crypto industry, it was the social tokens that made the actual leap from cryptocurrency circles to consumer audiences. Earlier in 2020, social tokens happened to be intriguing and mostly worked as an additive process or hypothetical alternative for artists, brands, and creators for connecting with their fan communities. Influential celebrities did not take long to witness its value once the base technology was actually developed.
In 2020, rather than building a large platform’s revenue, while receiving only a particular piece of it, artists and creators started utilizing their own token for building their own economies and communicating with fans according to their own terms rather than following the norms of the platform. Blockchain technology took the decision-making process out of the hands of bigger platforms into the hands of the fans and the creators along with the community members.
Concerns regarding online threats to individual privacy were developing in recent years. From hijacked doorbell cameras to high profile data breaches, people have witnessed a steady increase in the volume and scale of privacy-related incidents. However, in 2020, driven by worldwide protests and a global pandemic calling into question the surveillance power of governments, online privacy solutions were a turning point.
With decentralized and end to end encrypted systems, millions of individuals were learning about the privacy pitfalls of the internet, thereby witnessing essential developments in privacy law as well in 2020. Throughout the world, regulations intended to strengthen privacy protections for people and laws were passed by the States for strengthening provisions in the consumer privacy act. The role of decentralization in supporting an end to end encryption has turned out to be more essential than ever. While the end to end encryption will stay, decentralization plays an important role, thereby making sure that privacy systems are not just resilient but also effective.
Unequivocally thematic investing has driven returns in 2020 particularly in the areas, such as structured tokens, rewards, DeFi, and staking. The decentralized finance sector of the market has been hands down in digital assets from both returns and growth perspective.
Going deeper, decentralized trading exchanges have remained one of the most impressive subsectors revealing all-time record high volumes. The growth and strength were also seen to be coming from asset management protocols, lending and borrowing platforms, synthetic assets and insurance. A wide assortment of diversified decentralized finance tokens across insurance, asset management, lending, and borrowing created the robust subset of returns throughout any other sector of digital assets.
Apart from that, the robust decentralized finance returns did not arise from the growth of platforms, rather much of it can be attributed to enhanced economics and structured tokens. The flexibility of token structures has enabled token issuance to transform their rules and improve the features that come with buying the token and participating in the network.
While this was held back by the negligence of investment bankers and regulatory clarity, slowly, non-crypto native organizations have been utilizing tokens throughout 2020. For example, Reddit issued tokens. With this being a minute example, the world happens to be beginning to recognize that utility tokens can be utilized within a company’s capital structures because it complements debt and equity.
2020 has been the time to bet on your career in cryptocurrency. A sequence of historical developments to the essentials of the asset class in 2020 has decreased the risk. In the meantime, potential rewards happen to be as high as ever.
The risk tolerance needed to jump into cryptocurrency has decreased substantially in 2020 with breakout successes from endorsement and startups from institutional investors and the market cycle, indicating the resiliency of the asset class and people who believe in it.
Market environments have validated those who kept their heads down and developed during the painful drawdown from 2018 to early 2020. Altogether, the shifts within the risk profile of cryptocurrency are out of the danger zone for various people, thereby promising immense potential rewards. Though the industry is in the embryonic stages, there has been tremendous progress.
Bitcoin comes with a finite supply and operates on a model of deflation, indicating that gradually fewer Bitcoin will be released until people reach 21 million. Presently, there is approximately 18.5 million Bitcoin in circulation. This happens to be different from Fiat currencies which utilize an inflationary model where the central banks print additional currency at will.
Zimbabwe and Venezuela are examples of such a strategy and hence some investors consider Bitcoin as a hedge against inflation. The third Bitcoin halving happened in May 2020, followed by two previous halvings leading to dramatic price increments. Halvings can be considered as planned reductions that occur once every four years. While the first having happened in 2012, there were approximately 43000 Bitcoin addresses followed by a second having in 2016 where there were approximately 7 million and now there are more than 48 million Bitcoin addresses.
With that being stated, it can be said that the potential use cases for cryptocurrency assets and blockchain technology have been accelerated by covid-19, providing a glimpse into how they could be utilized in the financial system of the future. Blockchain technology comes with the potential for creating a framework for delivering sustainable, scalable, and global universal basic income. It is one of those technologies that would make it possible to send money directly to people without the requirements for intermediaries, decreasing both corruption and cost, thereby making it one of the most promising technologies in the upcoming years.