Simon gave ten predictions on the 2021 crypto market Bitcoin price, Ethereum price, stable currency issuance, and the development of DeFi.
Original title: “Bitcoin welcomes a good start, the top ten predictions of the crypto market in 2021 are waiting for you to witness”
Written by: Simon Seojoon Kim, managing partner and CEO of Hashed, a South Korean blockchain investment institution
Translation: PANews
The author of this article is Simon Seojoon Kim, managing partner and CEO of Hashed, a South Korean blockchain investment institution. Hashed is the largest local cryptocurrency investment fund in Korea, and Simon himself is also an early communicator and leader of the Korean crypto community.
Simon wrote these top ten predictions on Jeju Island on January 2, and PANews was authorized and translated and published.
In the same period last year, they also released ten predictions. Among them, 7.5 were successfully achieved in 10 predictions regarding Bitcoin, DeFi, and central bank digital currency. What observations and predictions did he have this year? Read and witness together.
Bitcoin (Bitcoin)
It is expected that Bitcoin will maintain a steady bull market in 2021.
Since the birth of Bitcoin, BTC’s holdings on cryptocurrency exchanges have been increasing. However, starting from February 2020, institutional investors have begun to propose a large number of bitcoins from exchanges in order to hold bitcoins for a long time. If you want to lower the price of bitcoin, you must sell bitcoin on an exchange, but the sell-side liquidity crunch is increasing. As institutions begin to buy bitcoins in large quantities from the middle of 2020, this trend is accelerating. It is expected that in 2021, bitcoin holdings in cryptocurrency exchanges will continue to decline.
In 2020, as institutions buy Bitcoin, the Bitcoin holdings of cryptocurrency exchanges begin to decrease
Driven by the needs of institutional investors, one of the largest entities buying Bitcoin is Grayscale. The total amount of custody has continued to grow from USD 2 billion at the beginning of 2020, and will exceed USD 20 billion by the end of 2020. Most of these assets are still concentrated in Bitcoin, which is expected to remain so in the future.
Recently, the trading volume of Bitcoin futures on the Chicago Mercantile Exchange (CME) has surpassed OKEx, a strong traditional cryptocurrency futures exchange, and won the top spot. This is also a landmark event that reflects the entry of major institutions into the Bitcoin market.
As a hedge against the central bank’s quantitative easing policy, the purchase of Bitcoin by listed companies such as Microstrategy will also become a greater trend.
On the other hand, the market value of Bitcoin has unknowingly surpassed the currency market value of backward economies, and countries that purchase Bitcoin as a reserve asset may appear in 2021.
Prediction 1. The Bitcoin ETF will become the first approved digital currency ETF in history.
Prediction 2. The price of Bitcoin will challenge $100,000.
Ethereum (Ethereum)
In 2020, mainstream media mainly focused on the price of Bitcoin, but in fact, judging from the price changes since the beginning of the year, as of January 2nd, the increase of Ethereum was higher than that of Bitcoin.
Bitcoin (BTC): $7,195 → $29,001 (4.03x)
Ethereum (ETH): $129.6 → $737.8 (5.69x)
Judging from the basic indicators on the chain, Ethereum has achieved tremendous growth compared to Bitcoin. As the decentralized financial DeFi that creates actual value begins to grow, based on this, the on-chain transaction fees generated by Ethereum far exceed those of Bitcoin.
Comparison of total network fees between Bitcoin and Ethereum in 2020
Next year will be a period for institutional investors to enter Ethereum after Bitcoin. CME’s start to trade Ethereum futures is also a good sign.
Although ETH 2.0 is slow, it is steadily achieving development milestones. The achievement of the pledge target in Phase 0 also reflects the firm support of the Ethernet core community. Not only individuals, but institutions have also participated in Ethereum staking, which is also a very positive sign.
Active financial institutions will invest and research on Ethereum as a means of asset allocation, realize that it can use smart contracts and token innovation to improve the infrastructure of the entire financial system, and will try more aggressive tests.
Prediction 3. The price of Ethereum will achieve ATH (the highest price in history).
Stablecoin (Stablecoin)
Following China, there will be countries that will try CBDC (central bank digital currency). Through CBDC, the forced digitization of traditional financial systems and assets will develop rapidly.
Since CBDC is based on a private blockchain, although it can be quickly integrated and applied to traditional financial institutions, it will not be able to penetrate the open developer ecosystem and create innovative combined cases. In addition, the central government’s debate over the censorship system will never end. Therefore, the proliferation of CBDC can instead become a driving force to actively promote the further development of the stablecoin ecosystem circulating on the public blockchain.
The issuance of stablecoins on Ethereum increased to 20 billion U.S. dollars
In addition to cryptocurrency exchanges and DeFi, stablecoins will expand to the entire financial technology field, including settlement and remittance, investment and other financial fields. Like USDC, many private financial institutions or banks will rush to issue stablecoins based on a centralized custody system.
Restrictions on decentralized stablecoins that are secured by encrypted assets or based on algorithms like DAI will be put on the agenda. However, successful projects with fully decentralized issuing and operating entities will steadily grow on systems that are out of control and censorship, and continue to cooperate or compete with centralized stablecoins.
Prediction 4. The total issuance of stablecoins on public blockchains will increase to 100 billion US dollars.
Decentralized Finance (DeFi)
The growth of the DeFi industry in 2020 is a milestone turning point, which proves that the financial protocol based on the chain can surpass the value storage function of the new asset class of digital gold (BTC) and develop into a composite financial field. In 2021, DeFi will also promote a variety of crypto asset wallet solutions while combining more B2C financial technology services to promote a simple user experience and increase the total value of locked positions (Total Value Locked).
The biggest drawback of DeFi—high handling fee and slow transaction confirmation speed will be solved by various Layer 2 projects and technologies such as zkRollup. In 2021, many major DeFis in the Ethereum ecosystem will begin Layer 2 testing. In addition, the interoperability between DeFi in different Layer 2 of Ethereum, and the interoperability between DeFi on Ethereum and other main chains will appear.
Run Curve.finance of Testnet in zkSync
Fundamentally speaking, due to the nature of smart contracts, it is difficult for DeFi to fix or update vulnerabilities compared to general applications. Just like DeFi’s alias currency Lego (money LEGO), when creating new products or infrastructure by combining and assembling various components, the complexity will only increase geometrically and expose people to greater and unpredictable accident risks .
If the DeFi industry has been led by innovators with innovative ideas so far, then from 2021, the market will be led by experienced developers with the knowhow of advance prediction and defense. Andre Cronje, the founder of YFI, is a good example.
In 2021, many vulnerabilities and hacking incidents will occur in the DeFi industry, but the efforts of developers and projects that quickly overcome each problem will continue to fill the loopholes quickly and achieve industry development. The insurance agreement market will also continue to grow in proportion to the scale of the DeFi market.
On the other hand, the market value of mainnet tokens that do not have a large-scale operation of DeFi will stagnate or decline, and be squeezed out of the top ranks.
Prediction 5. The total value of DeFi locked position (TVL) will challenge $100B.
Prediction 6. At the end of 2020, there will be 10 DeFiTokens in the top 50 market capitalization, and it will increase to more than 13 at the end of 2021. The market capitalization of DeFi tokens will increase to more than 30% in the Top50.
Decentralized exchange
Dex’s annual transaction volume in 2020 is 116 billion U.S. dollars, an increase of approximately 39 times compared to 3 billion U.S. dollars in 2019. Dex migrated to Layer 2 will appear in mid-2021 and will handle more transaction volume based on low handling fees and fast transmission speed.
Monthly trading volume of decentralized exchanges in 2019 and 2020
In addition, just as the volume of derivatives trading on centralized exchanges has surpassed that of futures, Dex will also usher in a year in which the proportion of derivatives trading such as futures and margin trading has increased dramatically.
Forecast 7. Dex’s transaction volume will increase to over 500 billion USD in 2021
Security token
In the long run, all stocks will be used in the form of security tokens. Since security tokens are easy to verify and manage their identity, can reduce transaction costs, and are issued and circulated in a programmable manner, security tokens are superior to traditional stocks in all aspects as long as they are supported by the regulatory environment. The former chairman of the US Securities and Exchange Commission (SEC) said in an interview with the director of the Office of the Comptroller of the Currency (OCC): “All stocks can be digitized.”
Through security tokens, it is possible to transparently and fairly distribute rewards corresponding to their contributions to platform participants (not only legal tender, but also in the form of stocks), open governance, and lay the technical foundation for the implementation of “protocol economy” .
The Ministry of SMEs and Startups of South Korea also announced that it will pursue this vision in its 2021 policy. In this way, in 2021, regulations and guidelines will be formulated to support the issuance and circulation of security tokens in a wider range of countries and industries.
At the same time, cryptocurrency exchanges will continue to try to operate security tokens as a new business area.
Prediction 8. There will be companies that issue part of the company’s stock to the market in the form of security tokens.
Listing & M&A
With the development and maturity of the blockchain industry and the disclosure of the largest cryptocurrency exchange in the United States, Coinbase IPO, investors from larger institutions will participate in it, guide mergers and acquisitions between blockchain companies, and promote listing Make various attempts.
In fact, compared with mergers between traditional enterprises, mergers between on-chain DeFi projects can be achieved through a faster and more efficient protocol (Protocol). The faults caused by competition and victory among DeFi projects will be further amplified, and accordingly, the pressure on the synergy of network and community merger will increase.
Although Yearn Finance has announced a merger with decentralized financial projects such as Pickle Finance, there are actually no financial transactions, just the degree of close cooperation and marketing. We hope to see a merger between real DeFi projects in 2021.
Prediction 9. From 2021, we will be able to see real mergers and acquisitions between blockchain companies, and mergers between DeFi projects will also appear.
NFT & Blockchain Game
Regrettably, the blockchain game market did not grow significantly in 2020, but increasingly powerful IP such as the NBA, and large game companies such as Ubisoft Ubisoft, Square Enix, Atari Atari and other large game companies continue to participate in the blockchain game field Continue to make 2021 worth looking forward to.
With various content and entertainment companies gradually entering the construction of Metaverse, there will be more and more cases of issuing scarce digital avatars through the combination of Metaverse and NFT (Non Fungible Token). The Sandbox uses famous IP such as Smurfs and Care Bears to realize NFTization is a good example.
The introduction of NFT will also expand in the field of art. Dapper Labs, the operator of Flow, has created a virtual avatar and commodity ecosystem through cooperation with Genies. After the virtual internet celebrity Miquela issued NFT through the encrypted art distribution and intermediary platform Super Rare, the transaction price reached 100 million won (about 600,000 yuan) .
NFT also appeared in the world’s largest auction house Christie’s auction. It can be expected that NFT-based technical cooperation cases will appear more frequently and continue to challenge to find the formula for success.
An example of NFT issuance by virtual influencer Miquela
The NFT market is still growing gradually by relying on the destructive power of each content and IP, rather than by organically creating an ecosystem like DeFi. In addition to games, there will also be various use cases. Therefore, as a comprehensive indicator, it is difficult to predict the size or growth trend of the NFT market, but based on “how expensive a single NFT is traded in the market”, one can infer the blockchain What is the limit of its asset ownership certification function recognized by the public. The highest price so far is the NFT role of the $130k Axie Infinity traded in 2020 (price benchmark at the time: 300 ETH).
Prediction 10. There will be a single NFT price exceeding US$300,000 in 2021
Disclosure: This article cannot be used as a recommendation for any aspect of law, taxation, investment, finance, etc. That is, Hashed stated that it has not approved any type of financial product or digital asset transaction as recommended in this article.
