Wondering if it’s worth investing in cryptocurrencies? What will 2021 be like for Bitcoin, as well as other digital currencies? Will the price increase in recent months continue, or should we expect a sharp decline? These are questions that are currently troubling all investors who are looking for profitable projects on the cryptocurrency market. In this article, we will try to answer them in a way that is understandable for everyone.
MassMutual‘s pension fund has invested in Bitcoin
A much-talked-about event that will probably determine the further fate of cryptocurrencies is the decision of the board of one of the oldest pension funds in the United States – MassMutual. It has purchased Bitcoin for $1M. This fact is even more significant since pension funds represent the most solid, guaranteed capital. The purchase made by MassMutual is undoubtedly a breakthrough that probably no one expected. What are the cryptocurrency predictions? Among the institutions managing large sums of money, only central banks are higher. According to some experts, it is only a matter of time before they start purchasing bitcoins. It is possible that smaller banks will become interested in cryptocurrencies even in 2021.
Will digital money become relevant?
There’s a good chance that cryptocurrencies will take on a significance in 2021 that they haven’t had before. You can expect Major payment service companies such as PayPal, CashApp, and Revolut to incorporate digital currencies into their service (at least the most well-known ones such as Bitcoin, Ethereum, and Stellar). Why should they do so? Because implementing decentralized payment systems would allow them to earn about 10% per year, with a very high Level of security. No bank is currently able to offer such a high percentage.
Cryptocurrency predictions: which products are worth investing in?
Before answering this question, it should be noted that experts’ predictions are not always consistent. The cryptocurrency market is one of the most unstable financial markets. Many variables come into play that even predictions based on a meticulous and exhaustive analysis can turn out to be wrong. The accuracy of the prediction also depends on the criteria used to select the few most promising projects out of dozens or even hundreds.
Some experts believe that Bitcoin is currently the safest investment. The dazzling popularity of this cryptocurrency makes it a good investment product. The second place goes to the Ethereum network, which is growing at an impressive pace and attracting An increasing number of investors worldwide. The value of ETH is gradually increasing (currently, on 04.02.2021, the value is $1,669.53). Thus, it is one of the best investment products on the market, second only to Bitcoin, which investors most often choose.
Without much doubt, we can also say that projects like Compound, bZx, Aave, Balancer, or Link will be in Wall Street’s area of interest as New routes for capital flow. Who knows, perhaps Wall Street will share the fate of Silicon Valley and disperse, and the place itself will no longer be an icon of the American financial market as it shifts entirely to the Internet.
The year 2020 brought many changes in all areas of the economy. It did not spare financial markets and even decentralized payment systems, which were considered the most independent from macroeconomic factors. The consequences of all these processes initiated by the coronavirus pandemic are only now gaining momentum. There is no telling what turn events will take in the coming months and years.
Cryptocurrency predictions: ETH 2.0 and its twin projects
There is a good chance that in 2021 the ETH 2.0 project will finally be completed. The whole industry is waiting for it. On the other hand, projects such as Matic or xDai, which are also state-of-the-art and contain all the functionalities that the Ethereum network is equipped with, may gain importance. Furthermore, these currencies are associated with Lower fees, and transfers are made without delays, which are a real nightmare for ETH users.
What if Bitcoin’s exchange rate continues to rise?
The rise in the price of bitcoin, on the one hand, fuels the development of the market, and on the other – it entails the risk of intervention by state governments. The large influx of institutional capital into Bitcoin’s network undermines the existence of central banks and traditional money. Governments concerned about this development could resort to radical measures such as outlawing digital money. If such a decision were made in the United States, it would be a huge blow to The cryptocurrency market. This would not solely affect Bitcoin’s exchange rate.
In 2021, the value of Bitcoin will probably continue to rise – until the difference between BTC and other currencies becomes too high. This is when altcoins (Alternative cryptocurrencies) will start to gain in value; in particular, Ether, the Ethereum network’s currency (also based on blockchain technology), is most likely to dominate the market. It already ranks in the top spot. Changing the system to version 2.0 will, on the one hand, contribute to a decrease in the supply of ETH on exchanges, and on the other hand, will expand the possibilities of this network.
How can Facebook affect the industry?
In 2021. Facebook is set to release its digital currency: Diem. This event could turn out to be ground-breaking. If people begin to use Facebook money, sooner or later, they will probably convince themselves to use Bitcoin and other digital assets. In addition to Facebook’s initiative, the digital yuan, which is likely to come into widespread use in China, will also serve this function – you will be able to pay with it in stores. Although both of these currencies do not embody the ideals that guided the creators of Bitcoin, they can still help the public in getting used to cryptocurrencies.
A technology breakthrough after 2020?
Investors and financial experts are putting a lot of hope in the Ethereum 2.0 project. Why? The main weakness of many blockchain-based networks so far has been scalability. The speed of transaction processing, measured in seconds, could not Meet market demands. Users were transferring too many tokens between each other for the network to keep up with subsequent recording transfers.
Analyses indicate that Ethereum 2.0. will be a real innovation in this respect because it will allow online users to make instant transfers, regardless of the day and time. Thus, investors and companies that intend to use blockchain technology in their Business projects may be interested in the platform.
Cryptocurrency predictions: risk factors
A potential threat that financial markets around the world may face in the future is the unfriendly regulation of digital assets. A significant number of politicians do not understand the potential of alternative payment systems such as Bitcoin and Ethereum. This lack of understanding could translate into unfortunate laws that will Stunt or halt cryptocurrency networks’ growth. However, in the meantime, they represent a significant convenience and serve an important function within modern economies. The executive orders implemented at the initiative of the White House will be decisive in this matter.
Could altcoins threaten Bitcoin’s position?
Media coverage of digital currencies is on the rise, and the public has already begun to get used to them. It is no wonder that after the success of Bitcoin, various companies are releasing so-called altcoins or Alternative cryptocurrencies. These are the same investment products as stocks, bonds, or other securities. They have their specifics, of course, but are already firmly rooted in the world of finance.
Given the significant independence of the cryptocurrency exchange rate from macroeconomic factors, it is difficult to say whether any of the altcoins will manage to outperform BTC. If limited to what might happen in the near future, Bitcoin will continue to play a prominent role even if altcoins such as Ethereum will gain value.
Extensive analysis by experts confirmed that BTC would have an increasingly higher valuation (to which the media will contribute by spreading information about this cryptocurrency potential). We have reasons to believe that companies that have not yet considered digital currencies in their business activities will be interested in it. If Michael Saylor’s company, MicroStrategy, did not hesitate to invest in BTC, as well as a large investment fund, MassMutual, and several other high-profile entities, other corporations, and institutions may follow. Especially since Bitcoin’s creators have announced various improvements. Users will be able to conclude smart contracts with each other, and the Level of security will increase thanks to the adoption of so-called Schnorr signatures in the system.
What new developments can we expect after 2020?
According to experts, the price of BTC will continue to rise – it can even reach the equivalent of 100 thousand USD. Currently, we can also see an increased interest in altcoins (at the beginning of January, the price of ETH or XRP jumped up). Recently, there has been a rapid development of the entire industry. The launch of the digital yuan will probably be A milestone on the road to the widespread acceptance of cryptocurrencies in almost all corners of the world. It’s hard to pinpoint the exact moment when the breakthrough will occur, and wide swathes of the population will start using digital assets as means of payment – time will tell.
This may happen after the introduction of the digital yuan. China may be followed by other countries, provided that smaller banks create digital currencies without looking at the conservatism of the central bank.
Will 2021 prove to be a breakthrough year for alternative payment systems that operate outside the Traditional financial circuit? We’ll see.
The predictions are very much positive. Any investor interested in BTC has every reason to invest now while 2021 is gaining momentum. The price of Bitcoin, as we have already mentioned, can increase to 100 thousand USD! At the end of January, it reached the equivalent of 42 thousand USD. Altcoin prices aren’t rising at such a staggering rate, but there’s no denying that the upward trend is also true for many other assets of this type. If you are starting to invest and you are looking for some advice, you can easily find it on our website.