2020 was, by all means, a “crazy” year for anyone who invested in the bitcoin market. The last major “station” for the “king” of cryptocurrencies was the day of December this year that broke every previous record by climbing above $23,000.
When the US began to enter the Coronavirus vortex in early March, Bitcoin was below $4,000. Does that mean there was a source of profit or… for those who have decided to maintain or sell their positions in it accordingly.
For those who were just viewers, it was, as fintech expert James Ledbetter says in an article on CNBC, a fun shopping show.
He noted that despite the incredible volatility of its price – which moved mainly upward – 2020 was also a year of relative maturity for the cryptocurrency that, after all, has been trading for only a decade.
According to him there are 5 critical trends in Bitcoin for 2021.
1. Greater acceptance by the general public
The use of Bitcoin in everyday life has always been the problem “the hen gave birth to the egg…” Etc. Very few use it or accept it.
But in 2020 there was a big change in the acceptance of bitcoin. Major fintech companies, from Square’s $50m bitcoin investment to the move of PayPal to allow its users to buy and sell bitcoin, gave it a stamp of validity.
In 2021, we are expected to see an expansion of this broad acceptance. Look for at least one major U.S. or European bank that will announce a kind of system where bitcoin purchases will either be allowed or it will agree to retain digital assets for customers.
2. Competition from major technology companies
Whatever it has achieved in its 10 years, it has forced many large, international companies to think about offering an international digital currency themselves.
Every company involved in the payment sector understands not only that there is a market for digital payments but also that payments that include different foreign exchange markets have the most potential. This is because at the moment such transfers can take days to complete and often involve large commissions.
Bitcoin has shown that a global digital currency can dramatically speed up this process. This year both Facebook and Google – companies with a wide global reach, have advanced their plans to adopt a digital currency. For example, Facebook’s Diem may not be exactly the same as bitcoin, but if it starts in 2021 it could see some of bitcoin’s rise.
3. Competition from central banks
This year, the Bank for International Settlements released a survey that showed that 80% of central banks work on a form of digital currency.
China has advanced experimentation with digital currencies more than any other country. Recently the Chinese city of Suzhou, west of Sange, became a lottery in which 100,000 residents received 200 renminbi (known as yuan) equivalent to about $30 through a digital wallet.
These people were encouraged to link digital money to their bank accounts, and if they didn’t spend it within a few weeks, it would disappear.
As China progresses towards the nationwide adoption of the digital yuan, it is likely to stem demand for bitcoin and other cryptocurrencies. The same experiment may be seen in 2021 in other countries.
4. A new field of competition rules
The Biden administration will have higher priorities in the first 90 days of government, and it’s hard to know the mood and expertise that will exist with regard to cryptocurrencies.
The most natural assumption is that a Democratic administration will impose stricter rules than a Republican administration, but some argue that the Biden presidency will be a favorable development for cryptocurrencies.
However, Ledbetter notes, bitcoin enthusiasts tend to overlook topics such as anonymity and its possible use for scams. For regulators, these issues are too serious.
Biden’s team might as well find a more comprehensive and rational way to regulate the cryptocurrency, but Ledbetter wouldn’t bet on a favorable treatment for bitcoin.
5. Continued volatility
The value of bitcoin is not directly linked to fiscal or monetary policies. It can be underestimated or revalued in unpredictable and inexplicable ways.
As an investment, it is difficult because of the above to recommend it if one wants to avoid large losses. Some argue that in 2021 it could reach $50,000 and, although this seems extreme, it is not out of the question if investors move money from other assets into bitcoin.
Of course, Ledbetter concludes, it’s just as likely that his price will go in the opposite direction in 2021.
One thing that seems certain is that in 2021 we’re going to witness a crazy race, so… stay connected.