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Driven by Bitcoin's record-breaking rise, the crypto industry has ushered in a brilliant 2020. In this unprecedented turbulent moment, the field of digital assets seems to have proven its resilience, providing a solid reason for it to become a safe haven in an increasingly uncertain world.

In addition to other developments, institutions continue to expand the adoption of cryptocurrencies in 2020. So, is this trend expected to continue in 2021, and what factors will affect the adoption of cryptocurrencies in various sectors of the industry in the coming year?

The influx of institutional funds

It has become commonplace to attribute at least part of the recent development momentum of Bitcoin (BTC) to the impact of investment banks and hedge funds collectively entering the Bitcoin market. However, this trend has not shown any signs of abating.

From the important rhetoric that dominated the influx of big funds to the decisive change in political form, there is a lot of evidence that in 2021 the big names of traditional finance will become more and more optimistic about Bitcoin. Meltem Demirors, chief strategy officer of the digital asset investment company CoinShares, told Cointelegraph:

"The shift in perceptions around Bitcoin is profound! Larry Fink talked to Mark Carney on the conference call about Bitcoin as digital gold and said he believed that Bitcoin is the future; Guggenheim Chief Investment Officer Scott Minerd stated that Bitcoin will rise To 400,000 U.S. dollars. In the past, people in the industry made these bold statements. Now it is the authorities and giants in the capital market who have allocated trillions of dollars in Bitcoin."

Demirors further predicts that the incoming Democratic government of the United States will facilitate the influx of more funds into Bitcoin than in 2020. "5 trillion US dollars of funds are waiting to be deployed", all of these funds need to have a place to power the cryptocurrency market.

Dave Hodgson, Chief Investment Officer of NEM Group, also believes that the current U.S. monetary policy is the main driving factor for institutional capital inflows into Bitcoin: ¡°If the United States continues to expand'quantitative easing' (inflation, more money printing), it seems to be a wise and even A conservative fiscal choice to achieve asset diversification, and BTC will face a liquidity crisis."

Bitcoin is gradually replacing gold as a hedge against inflation, and this argument is still very convincing. Eric Richmond, chief operating officer of Coinsquare, a cryptocurrency trading platform, told Cointelegraph: ¡°In 2021, pension funds, family offices, hedge funds, macro investors and companies will allocate part of their portfolios to Bitcoin, and Bitcoin will continue to be an alternative to gold. Product."

Mass adoption

In 2020, retail investors will have access to cryptocurrencies more easily than ever, partly because popular payment companies such as PayPal and Square provide digital assets for their huge user base. The diversity of access points and increasingly intuitive interfaces will help more everyday users join the ranks of cryptocurrency holders, traders and investors in the coming year.

Miles Paschini, the founder and director of cryptocurrency investment application B21, shared his views with Cointelegraph. He believes that 2021 may be the year when the widespread adoption of cryptocurrencies will begin, adding: ¡°The tools for investors and payment system users will Banks that have become more user-friendly and have avoided cryptocurrency will begin to adapt and provide integrated services."

In addition to existing tools and platforms, new services that introduce large numbers of users to crypto assets will continue to emerge. Facebook's Diem will be one of them, Simon Peters, crypto market analyst at trading platform eToro, told Cointelegraph:

"Facebook has 2.7 billion users worldwide. Facebook's Diem will be launched in January this year, which may provide an important entry point for cryptocurrencies. If Diem is listed on cryptocurrency exchanges, it can be used to exchange bitcoins and other altcoins. , This may push new people to explore cryptocurrency."

Peters added that if it turns out that buying cryptocurrency with Diem is cheaper and easier than fiat currency, then Facebook's payment service may become another factor driving the mass adoption of cryptocurrencies in 2021.

Decentralized finance

Unlike other fields in the encryption industry, DeFi applications will explode in 2020. Many experts predict that this field will continue to grow in the next year, and the public's understanding of this field will continue to deepen. Erick Pinos, head of the blockchain platform Ontology Americas Ecosystem, told Cointelegraph that cryptocurrency allows its users to make money: ¡°Due to decentralized exchanges, lending, insurance, derivatives, mutual funds, etc., the opportunities for making money in DeFi are endless. Endless.¡± In general, Pinos expects that next year¡¯s transaction volume and product development will continue to focus on DeFi.

At the same time, a major factor limiting the growth of the DeFi field is the regulatory pressure that will inevitably appear in the process of connecting the traditional financial field and the decentralized financial field. At first, this may put considerable pressure on this emerging field, but in the end the rewards for compliance will be huge.

Lowering the barriers to using DeFi protocols by making the protocol user-friendly will also help expand the number of people using these investment tools. Will Liu, the head of the decentralized protocol SAGA, predicts: "In 2021, DeFi will present a more standardized and easy-to-use form. I believe that for a long time, it will be a good choice for individual investors."

Will Liu also believes that other hot trends in 2020, especially the various use cases of non-homogeneous tokens, will continue to gain attention in 2021. For example, digital and physical artwork NFTs will attract the attention of some large auctions, while personal data protection NFTs will benefit from the continuous development of data law.

Ethereum

The Ethereum infrastructure supports the activity of DeFi. Therefore, the outbreak of DeFi in 2020 promotes the overall use of the protocol. At the same time, the Ethereum community has experienced some notable milestones this year in the process of seeking to improve its network, and this process has not always been smooth.

Hodgson believes that due to the uncertainty of the completion date and expansion time of ETH2.0, issues surrounding network upgrades have caused some users to experience a certain degree of "project fatigue." However, Hodgson believes that once these issues are resolved, Ethereum's adoption rate outside of DeFi-related activities will increase. Richmond went on to add:

"Ethereum's transaction volume in 2020 exceeds US$1 trillion. With many new projects going online, this amount will continue to grow in 2021. Ethereum supports all major crypto products, such as stablecoins, DeFi, and cryptocurrency lending. And NFT applications. Since encrypted assets are critical to the development of these products, investors will definitely continue to use such assets to obtain these products."

Use cases outside the financial sector

According to some industry insiders, the adoption of cryptocurrency will also gain key benefits in the coming year when it is not directly related to currency transactions. Medical technology may be one of the most obvious areas of benefit, as the crisis triggered by the pandemic has highlighted the need for innovation in this area.

Chrissa McFarlane, CEO and founder of Patientory Inc., a medical technology startup, told Cointelegraph: ¡°Through 2020, one of the solutions that will be of interest to more mainstream audiences is to provide tokens that motivate users to stay healthy while providing They provide access to their medical records."

These accounts depict the blueprint of the crypto industry, which is expected to attract more people and institutions than ever before in 2021.

As a blockchain news and information platform, Cointelegraph Chinese provides only the author's personal views, and has nothing to do with the position of the Cointelegraph Chinese platform, and does not constitute any investment and financial advice. If you need to reprint, please contact the relevant Chinese staff of Cointelegraph.

On January 4, the price of Ethereum rose by 35% within 24 hours, exceeding US$1100, and its market value reached a peak of US$129.3 billion. The last time it reached this high point was in January 2018. Ethereum is currently in the entire crypto ecosystem. The market share is 12.5%. According to data from BitInfoCharts, the average transaction fee on Ethereum has soared to $11, the third highest level in history.

                      
LTC founder Li Qiwei reposted WhalePanda¡¯s tweets today:
1. By the end of 2021, we will see $100,000 in Bitcoin;
2. The market value of BCH and XRP will fall out of the top 10;
3. There is at least 1 in the top 10. Individual coins will be subject to SEC lawsuits (not USDT);
4. LTC will break through all-time highs;
5. stable coins will account for 10% of the total market value of cryptocurrencies.


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