In 2020, the cryptocurrency and blockchain industries have achieved rapid development. The two main assets, Bitcoin (BTC) and Ethereum (ETH), rose by 303% and 469%, respectively. This can be considered extraordinary compared to the 25% return on gold. Although gold is generally regarded as a safe-haven asset, these two digital assets outperform gold in the uncertain market conditions caused by the pandemic.
The Tie is a crypto company that provides social media analysis. Its co-founder and CEO Joshua Frank told Cointelegraph: “Among the 100 assets with the highest market capitalization, the average number of tweets for these cryptocurrencies has increased by 87%. Bitcoin’s tweets soared 95%.”
Frank added that although the current rally is driven by institutional interest, retail interest appears to be on the rise. All of this will eventually lead to increased interest in altcoins: “It is worth paying attention to which medium-sized assets continue to surge in social activities, because this is usually a good leading indicator of price changes.”
In the context of rapid price increases, the attention surrounding cryptocurrencies has surged, and many companies, projects and cryptocurrencies have gained momentum in 2020.
Bitcoin: the most important crypto asset
There is no doubt that Bitcoin is the most mentioned crypto asset in 2020, and the number of mentions on Twitter has increased by 95% year-on-year. The price of Bitcoin has risen from around $7,000 to an astonishing historical high of nearly $35,800.
Bitcoin has received widespread attention from mainstream media in 2020. Grayscale, MicroStrategy, Square, and MassMutual have invested heavily in Bitcoin, and even corporate giants such as PayPal and JPMorgan Chase have begun to invest in Bitcoin to take advantage of the opportunities offered by Bitcoin. John Todaro, research director of TradeBlock (an institutional trading tool that provides digital currency), told Cointelegraph:
“Institutions have begun to pour into the crypto ecosystem for the first time, with MicroStrategy, Square, MassMutual, etc. taking the lead in entering the crypto market. So far, all these major institutions have only deployed Bitcoin, because Bitcoin may be the strongest in terms of anti-inflation Big digital currency.”
MicroStrategy CEO Michael Saylor even recently suggested on Twitter that billionaire Elon Musk should convert Tesla’s balance sheet from U.S. dollars to Bitcoin. The Bitcoin bull market in 2020 will continue into the new year and is expected to continue for some time. Considering that this is the beginning of mainstream and institutional interest in Bitcoin, for all encrypted assets and blockchain technology, 2021 will be a more important year.
Although JP Morgan Chase stated that Bitcoin is overbought, it will continue to withdraw funds from gold investors; however, Goldman Sachs said that these two assets can coexist. Todaro added: “You may also see more companies follow in MicroStrategy’s footsteps and invest a small portion of their asset reserves in Bitcoin as an asset. These are good signs that Bitcoin cannibalize the gold market share. “
Ethereum: the blockchain with the most use cases
Ethereum is a blockchain network that runs smart contracts and supports the largest altcoin ETH. The main use case of the Ethereum network is to exchange value without third-party intervention. The Ethereum network was conceived by the developer Vitalik Buterin in 2013 with the purpose of expanding the use cases of Bitcoin technology and officially launched on the mainnet in 2015. Compared with Bitcoin, ETH does not have a hard cap, and there is a possibility of unlimited supply.
Ethereum has shown promising improvements throughout 2020. In early 2021, the surge in the price of ETH occurred almost at the same time that Bitcoin continued to hit record highs, indicating that the enthusiasm of the crypto community had a positive impact. In addition to being a digital currency, ETH also acts as a gas fee for decentralized applications running on the Ethereum network.
The two landmark moments for Ethereum in 2020 are the rise of decentralized finance (DeFi) and the launch of the Ethereum 2.0 beacon chain. The DeFi market has achieved tremendous growth in 2020. The total value locked in has increased from US$687 million at the beginning of the year to US$14 billion at the end of the year, and it has soared to US$18 billion on January 4, 2020. This growth is usually attributed to liquid mining, yield farming, expectations of Ethereum 2.0 and the rise of DeFi oracles.
From the continuous growth of the total value (TVL) locked in DeFi projects in the second half of 2020, it can be seen that TVL should continue to grow in 2021, and more DeFi use cases will be generated through various DApps. Todaro further commented on the importance of Ethereum to the DeFi market:
“When you talk about DeFi, you can’t help but talk about Ethereum. Since most DeFi projects are built on Ethereum, when transaction volume soars, Ethereum has become the lifeblood of the ecosystem (gas cost during the DeFi bull market in the summer of 2020) The surge is proof).”
Uniswap: The largest DEX
According to the locked total value, one of the top players in the DeFi domain in 2020 is the decentralized exchange (DEX) Uniswap. DEX is a way of trading cryptocurrency, without the need for a central regulatory agency to support the transaction. Uniswap’s token exchange uses a liquidity pool guided by an oracle rather than an order book.
Uniswap even airdropped its own token, UNI, to its users as a controversial response to the SushiSwap vampire mining attack. Uniswap’s tokens have the fastest growth in the number of tweets, reaching approximately 1,500 per day.
According to data from DeFi Pulse, the competition between Uniswap and SushiSwap seems to be beneficial to both parties, because the total value locked in these two agreements accounts for US$4 billion of the total US$18.63 billion locked. As the supervision of centralized exchanges may be tightened, as market participants hope to maintain their trading capabilities on non-custodial exchanges, new users of DEX will surely increase.
Chainlink: the pioneer of DeFi oracle
In 2020, Chainlink will become the most widely used oracle network in smart contracts, which allows the blockchain to obtain real-world data in a timely manner. The Chainlink community is an open source community composed of data providers, node operators, smart contract developers, researchers, and security auditors.
The Chainlink community has its own token, LINK, which is a cryptocurrency used by the network to pay for various operations involving data. According to Frank, the number of LINK mentions on Twitter in 2020 has increased by 260% year-on-year.
Chainlink announced the establishment of partnerships with large entities such as Google and China-backed blockchain-based service network. Tezos, a rival of the Ethereum blockchain, uses Chainlink to provide real-time data for its community projects. Since the oracle provides real-time data for smart contracts, the oracle field will be further expanded in 2021, and Chainlink will compete with its competitors (such as Band Protocol and Compound) for market dominance.
Circle: The company behind the fastest growing stablecoin
Circle operates the stable currency USDC. USDC is the second largest stablecoin by market capitalization linked to the US dollar. It is the fastest-growing stablecoin in 2020. Its market value has increased from 500 million US dollars at the beginning of the year to 4 billion US dollars at the beginning of 2021, an increase of several times. Circle even cooperated with the US government on Venezuela’s “global foreign policy goals”, using USDC to distribute relief funds to medical workers and locals in Venezuela.
Given the recent concerns of US federal regulators, stablecoins may only be the first real point of conflict between the crypto community and regulators. They may soon be regulated by the so-called “Stability Act” (STABLE Act), which aims to “protect consumers from the risks posed by emerging digital payment tools, such as Facebook’s Libra[Diem] and others. Stable currency.”
The President’s Financial Markets Working Group even issued a statement on key regulatory issues regarding “certain stablecoins.” Todaro commented on the possible impact of increased regulatory attention on stablecoins: “Stablecoins may be subject to more regulation in 2021. It is difficult to see what will happen, but USDC may become more centralized than it is currently, and The relationship with the bank may become closer, rather than a decentralized consortium.”
This trend will continue until 2021
Although 2020 is an extraordinary year for cryptocurrencies, the growth of the crypto industry in 2021 has greater potential. The Chicago Mercantile Exchange will launch its Ethereum futures in February, which will surely further promote the development of the market.
Frank further believes that Twitter metrics indicate greater interest in cryptocurrencies in 2021: “The surge in Twitter conversations continued until the first week of 2021, and it was even more pronounced.” He continued to add: “Today, Ethereum The number of tweets reached a record high (twice the record set in 2018), and two days ago, Bitcoin and the entire cryptocurrency market both set a record high number of tweets, exceeding the 2017 record.”
