Crypto sector: These three trends can be identified for 2021

The year is drawing to a close, so the question is what will fundamentally change for the crypto sector in the coming year. The last Friday comment for this year should therefore outline the three biggest changes and make forecasts.

1. Institutional investors take the helm

In the last half of 2020, an expectation of the last few years was finally fulfilled: institutional investors have discovered the crypto market for themselves and, with their inflows of billions, are ensuring unabated price increases for Bitcoin. Almost every day there are new reports from hedge funds, asset management companies and companies that are pumping two or three-digit million amounts into the crypto market.

As much as this may please one or the other Bitcoin Trader scam investor, it also means, conversely, that the rules are now being made by the professionals on Wall Street and City of London and no longer by private investors or native crypto companies. Compared to regulated futures and options exchanges such as the CME, CBOE or Bakkt, crypto exchanges are thus becoming less relevant. After all, the new institutional investors do not trade with tokens at Binance and Co., but rather via futures on the aforementioned derivatives exchanges. Crypto traders will therefore also have to adapt their analysis methods in 2021.

At the same time, public opinion is shaped more strongly by the old economy. After all, it is their analysts and company spokesmen who classify the situation on the crypto markets.

The new medium of tokens is transferred to the corset of the old world by building appropriate indices and securitizing digital assets in securities certificates. The situation is increasingly reminiscent of German car manufacturers. Although we know that electric mobility is the future, we still cling to combustion engines and build hybrid vehicles as a compromise.

2. Regulation leaves no stone unturned

With the arrival of the old economy in the crypto sector, the rules of the game are also being adapted. Everything is becoming more regulated, the free spaces are becoming smaller. Already in 2020 warnings from politics were often heard that they were ready to heavily regulate and, if necessary, ban crypto currencies and, above all, stablecoins. In 2021, the fight against anonymity in the crypto space will be announced, as was recently emphasized and partially implemented by the G7 and above all France .

Laws on KYC are passed across states in the interests of each state. In particular, digital central bank money (CBDC) and stablecoins such as Facebook’s Diem, formerly Libra, will usher in a new crypto age in 2021. Also worth mentioning here is PayPal, which will continue to roll out its existing crypto service in 2021. Corporations are taking back control of the crypto market and user data in coordination with the states – this is the compromise for the green light.

Greater consumer protection, greater user-friendliness, rising prices due to more and above all professional market participants are the positive sides of this change. On the other hand, decentralization and the crypto narrative are turned inside out. In 2021, control will go back to some extent from the end consumer to the state or corporation. After all, it is primarily custodial wallets on which Bitcoin and Co. are stored. The user is therefore giving up access to the crypto offers of the newer hour more and more often. 2021 will therefore be a downright sad year for advocates of high privacy.

As a consequence of this regulatory offensive, a stronger counter-movement will slowly form in 2021, which is fed by the DeFi ecosystem. When it comes to really decentralized protocols, be it decentralized credit networks (crypto lending) or decentralized stock exchanges (DEX), authorities and corporations break their teeth. A decentralized DeFi ecosystem does not fit into their regulatory concept and will therefore increasingly offend. If not yet in 2021, this will lead to a massive regulatory conflict. The current discussions about Diem, on the other hand, should seem harmless. Before that happens, the DeFi sector has to grow significantly first.

Bitcoin celebrates new highs while USD is in freefall

IN BRIEF

  • The USD index shows a 7% drop since the beginning of the year, dropping below 90 for the first time in 2 and a half years.
  • The dollar has been affected by global socio-economic uncertainty and rising inflation.
  • Bitcoin has risen nearly 350% this year as it is increasingly seen as a hedge against inflation and a store of value.

The dollar index fell below 90 for the first time since April 2018. This is the lowest level for the global reserve currency in the last 2.5 years.

As the world, especially the United States, continues to suffer from widespread economic turbulence, general uncertainty and rising inflation, the value of the dollar has taken a significant hit.

Throughout this year, the dollar index fell by about 7%, from about 97 to its current level of 89.96. The dollar’s index has been on a downward trend since the beginning of the year.

While the world’s fiat currencies are struggling under the current socio-economic conditions, cryptomoney companies like Bitcoin are suffering the opposite effect.

Protecting against inflation

While the world’s fiduciary currencies are experiencing multi-year difficulties and troughs, the opposite is true for Bitcoin.

Since the beginning of 2020, the value of the crypto nation pro has increased by almost 350%, with its peak market value rising from $120.4 billion at the beginning of the year to $419.5 billion currently.

As the world struggles to find the best way forward economically, Bitcoin and its predetermined supply and production rate seems to bring some stability in the midst of uncertainty.

Can Bitcoin replace the dollar as a store of value?

Traditionally, when a person seeks financial stability, they hold „safe“ assets such as gold, real estate or a globally dominant currency.

With a global pandemic and a world economy at a standstill, partly supported by galloping inflation, many users and institutions are beginning to view Bitcoin as a safer cash asset than its alternatives.

There are many examples of institutions that are following this thought process. One of the best examples is MicroStrategy, a member of the S&P SmallCap 600 Index, which owns more than $700 million of Bitcoin and plans to purchase an additional $650 million.

Michael Saylor, MicroStrategy’s CEO, decided that it would be safer for the company to have a portion of its cash reserves in Bitcoin rather than USD, as he sees Bitcoin as a stronger hedge against inflation. So far, Saylor seems to be right, as digital assets continue their steady rise after recently surpassing their previous record.

Although daily price movements are not an indicator of long-term strength or ease of use, Bitcoin has continued to recover with a daily increase of almost 20%.

Tesla: Elon Musk flirts with bitcoin investment

Elon Musk makes advances toward a billion-dollar bitcoin investment and promptly gets some free advice from MicroStrategy CEO Michael Saylor on Twitter.

That’s where two have sought and found each other: A lively Bitcoin debate has erupted on Twitter between Tesla CEO Elon Musk and MicroStrategy CEO Michael Saylor, making high waves in the crypto space. In the process, Michael Saylor took a salacious post by Musk for free investment advice.
cryptocompass

Bitcoin on a record run!

Saylor’s „Insider Tip“:

If you want to do your shareholders a $100 billion favor, convert the $TSLA balance from USD to BTC.

According to Saylor, the radiance of a Tesla entry into Crypto Engine could entice other S&P500 companies to invest as well, thereby cranking up BTC market capitalization and rapidly increasing the value of a $100 billion USD investment tenfold.

The simple math eventually worked out in MicroStrategy’s case: since the publicly traded software company shifted about $475 million of its cash reserves into BTC, the investment has more than doubled in the wake of the Bitcoin bull run, at a current value of more than $958 million.

Musk, who is no stranger to cryptocurrencies, then rejoined the discussion and inquired of Saylor whether transactions of the magnitude were even possible.

Saylor’s answer was not long in coming. An unequivocal: Yes. He himself had invested $1.3 billion in Bitcoin in recent months and would be happy to share his „playbook“ with Musk, from one rocket scientist to another.

Tesla soon to be Bitcoin Hodler?

How serious Musk’s comments are remains to be seen. The Tesla and SpaceX CEO not infrequently uses irony as a stylistic device on the short message platform. Nevertheless, an entry into BTC is not completely out of the question. Musk has already expressed his admiration for digital gold in the past and, as the proud owner of – after all – 0.25 BTC, already counts himself among the Hodler genre. In the process, he also has to repeatedly serve as a potential CEO candidate for the MemeCoin project Dogecoin.

The balance sheet also proves MicroStrategy’s investment strategy right and could follow Musk’s words with action. A former project of the go-getting businessman, PayPal, has finally opened up to the Bitcoin economy as well. It is not unlikely that Tesla could follow suit. The appropriate Bitcoin ATM is already in place at the Gigafactory in Nevada.

Bitcoin back on track: S2F model still predicts $ 100,000

Bitcoin is back on track at $ 100,000, data shows.

Bitcoin ( BTC ) follows the price forecasts pretty closely and is now offering investors profits in this bull cycle, according to the well-known analyst PlanB.

In a tweet on December 17 , the creator of the stock-to-flow rate model stated that Bitcoin’s growth in its current halving cycle is going as planned.

BTC price hits $ 23,562 stock-to-flow model forecast

Despite the tremendous volatility this week, the stock-to-flow model can predict the rate at which the Bitcoin price will change over longer periods of time.

Critics have argued that Bitcoin cannot replicate its behavior from the last bull cycle, especially 2017, and that gains would not be as strong this time around. It would also take longer for them to materialize.

If you compare the development since May (the day of the third Bitcoin halving ) with the development after the first and second halving in 2012 and 2017, this year could not be more exemplary, according to PlanB.

„Rest in peace ‚longer cycles‘ and ‚dwindling gains'“, as he summarized with a new chart.

Bitcoin’s run to a high of over $ 23,000 has ensured that it is now precisely following the forecast of the stock-to-flow model. At just under $ 20,000, the BTC / USD pair was actually below expectations when compared to the model’s predictions.

As Cointelegraph reports , however, Bitcoin Trend App already outperformed its development in November as part of the halving of 2016.

The different versions of the stock-to-flow model forecast a Bitcoin price between 100,000 and 576,000 US dollars by the end of the current halving cycle in 2024. The BTC / USD pair had exactly the daily forecast on Thursday at 23,562 US dollars of the original model.

Erb: Bitcoin „fair price“ is $ 12,000

More and more institutional financiers share this view and are investing their money to prove it.

This week, One River Asset Management announced plans to increase its Bitcoin and Ether ( ETH ) holdings to over $ 1 billion by early 2021. Guggenheim has reserved the right to invest part of its own capital in BTC. The company said fair value for bitcoin was $ 400,000 . That’s 1,600 percent more than Thursday’s all-time high.

Only a few people still back the bear. Among them is Claude Erb, the asset manager who wrote the book „The Golden Dilemma“. In it he argues against the use of the precious metal as a hedge against unexpected inflation.

In a new report titled „Bitcoin is just like gold except when it isn’t,“ Erb creates a new price model loosely tied to the network effect. He calculated a maximum theoretical value of 74,000 US dollars per bitcoin.

„Bitcoin has no track record as an inflation hedge, a store of value and a safe haven,“ the executive summary reads.

„The Bitcoin course can be broken down into a questionable, fair ‚Bitcoin network‘ course and a fair course deviation. Bitcoin and gold are about 50 percent above their ‚fair price‘.“

Wird es eine größere Korrektur für Bitcoin geben?

Wie wir alle wissen, hat sich Bitcoin in letzter Zeit recht gut entwickelt. Analysten auf der ganzen Welt sind begeistert, dass Bitcoin sein Allzeithoch wieder erreicht hat, und viele glauben, dass der Vermögenswert kurz davor ist, noch weiter zu springen.

Bitcoin macht sich gut, aber wird es bald wieder fallen?

Einige haben jedoch davor gewarnt, dass eine Korrektur im Gange sein könnte, und obwohl es dem Vermögenswert zum Zeitpunkt des Verfassens dieses Artikels sehr gut geht, ist jetzt vielleicht nicht der richtige Zeitpunkt für den Kauf neuer Einheiten. Laut Ian Balina zum Beispiel – Geschäftsführer von Token Metrics in Washington – könnte der Preis für Bitcoin in den kommenden Wochen möglicherweise auf bis zu 14.000 Dollar fallen.

In einem kürzlichen Interview erklärte er:

Bitcoin schneidet besser ab als erwartet. Obwohl Bitcoin aufgrund makroökonomischer Faktoren und der Tatsache, dass große Unternehmen in die Kryptotechnik einsteigen, langfristig immer noch aufwärts gerichtet ist, gehen wir davon aus, dass Bitcoin bis zur ersten Dezemberwoche wieder auf etwa 14.000 $ korrigiert werden könnte.

Es könnte etwas schwierig sein, dieser Botschaft zum jetzigen Zeitpunkt Glauben zu schenken, wenn man bedenkt, dass wir uns bereits in der ersten Dezemberwoche befinden und dies noch nicht geschehen ist. Er scheint jedoch mit seiner gegenwärtigen Stimmung nicht allein zu sein, da andere Branchenanalysten ihren Anhängern raten, den Kauf der weltweiten Nummer Eins der Krypto-Währung durch Marktkapitalisierung zu unterlassen – zumindest für eine Weile.

Phillip Gradwell – Chefvolkswirt der Blockkettenanalysefirma Chainalysis – gibt ebenfalls eine Warnung heraus und sagt allen, die zuhören werden:

Der Bitcoin-Preis wird von der Nachfrage nach einer sicheren Anlage getrieben. Dies hat sich seit Mitte März verstärkt. Seitdem wurden über eine Million Bitcoins von Anlegern, vor allem von westlichen Börsen, gekauft. Diese wachsende Nachfrage trifft auf ein schrumpfendes Angebot, da immer weniger Bitmünzenbesitzer bereit sind, zu verkaufen, wobei das Angebot an Bitmünzen flüssig ist und so niedrig ist, wie es Mitte 2017, vor dem letzten Bull Run, war.

Sollte die Währung wieder auf den Stand von Mitte 2017 zurückfallen, müsste der Vermögenswert buchstäblich mehr als 15.000 Dollar von seinem aktuellen Kurs abwerfen. Dies wäre ein ernsthafter Verlust für den Vermögenswert und würde wahrscheinlich viele Menschen wieder in die gleiche Gemütsverfassung versetzen, die sie Ende 2018 hatten, als der BTC nach einem Jahr stetiger Kursverluste schließlich abstürzte und einen Preis von etwa 3.500 Dollar pro Einheit erreichte.

Vielleicht wird alles beim Alten bleiben

Allerdings ist nicht jeder davon überzeugt, dass die Zukunft für Bitcoin düster und unheilvoll sein wird. Micah Erstling – ein Händler des in Hongkong ansässigen Bitcoin- und Krypto-Market-Maker GSR – sagt, dass viele Anleger, darunter auch er selbst, der Ansicht sind, dass der Vermögenswert seinen gegenwärtigen Bullenlauf in den kommenden Monaten problemlos fortsetzen wird. Er erwähnte kürzlich:

Es wächst der Glaube, dass wir noch vor Jahresende 20.000 Dollar erreichen könnten. Noch wichtiger ist, dass die Anleger glauben, dass diese Rallye nachhaltig ist. Viele Anzeichen weisen darauf hin.