The story of cryptocurrency has been bittersweet. In 2017, when Bitcoin was at its peak, everyone though there’s no looking back. But then, in a flash, Bitcoin floundered, and investors lost millions. Then within a couple of weeks, it surged again.
The North American cryptocurrency market is projected to reach $1,758.0 million by 2027 with a CAGR of 11.2%, showed a report by Fortune Business Insights. Several factors are attributing to this surge, with the primary reason being increased funding and investment in the US cryptocurrency market.
According to Statista, the global equity funding and investment of blockchain startup companies were valued at $3.08 billion in 2019, compared with $1.25 billion in 2017. if you want to start your business with the same idea then have a look at 7 Steps to Starting a Successful Cryptocurrency Exchange Business.
As we step into 2021, several advancements and developments in the cryptocurrency industry pave the way for new opportunities for cryptocurrency startups.
Let’s discuss the cryptocurrency trends to look out for in 2021 and beyond.
1. Stablecoins to Take the Lead
Stablecoins are cryptocurrencies that are intended to alleviate the volatility of the price. These currencies are designed to peg their market value against a stable asset like cryptocurrency, exchange-traded commodities, or fiat money.
Looking forward, stablecoins can be the best cryptocurrency trends to invest in 2021. Two reasons might be catalyzing the growth of stablecoins. First is the instability of non-centralized tokens, and second is the anticipated dethroning of tether, the current stablecoins industry leader.
Tether was one of the earliest stablecoins to enter the cryptocurrency sub-industry. But as the industry has developed, tether has experienced numerous growing pains. Now, as new stable coins continue to enter the market, tether’s dominance might soon come to an end.
2. Governments Introducing Their Own Cryptocurrency
COVID-19 was not the only thing that emerged from China during late 2019. Along with it was the news that China is planning to introduce its own cryptocurrency to compete with Bitcoin. The initiative is backed by the Chinese government led by Xi Jinping with an aim to replace the age-old cash system.
The People’s Bank of China began a cryptocurrency research group in 2014 but shut it down after Bitcoin plummeted in 2017. Now, as the market seems to gain stability, China has restarted its cryptocurrency efforts. While less is known about China’s cryptocurrency, it’s known to share some elements with Facebook’s Libra.
Similar trends are being witnessed in Sweden. In Feb. 2020, Sweden’s central bank –The Riksbank – announced the launch of e-krona, a proposed digital currency that’ll use distributed ledger technology. The government has stated the obsolescence of physical cash as the primary motive behind this project.
3. The Era of the Institutional Investors
One of the biggest cryptocurrency trends is the entry of institutional investors. While individual investors continue to rev up their trade figures, institutional investors are expected to climb up the board in 2021. This is new because mainly the individual investors have dominated the cryptocurrency industry.
The entry of institutional investors will result in significantly larger trading volumes. So, even if the trading volume in the digital currency space will be low, the industry will manage to sustain itself.
How exactly will institutional investors make their way into the cryptocurrency market is still a dilemma. Several developments are anticipated to take place in the upcoming year. Many believe that if cryptocurrency gets floated on a major exchange like Nasdaq, it could witness a boost in reputation and value.
4.Payment Gateways Integrating Cryptocurrencies
One of the latest cryptocurrency trends today is regular wallets enabling cryptocurrency payments. In November 2020, PayPal announced that its users could buy, sell, and hold for cryptocurrencies – Bitcoin, Litecoin, Bitcoin Cash, and Ethereum.
Source: Memphis Flyer
This move by PayPal has paved the way for mobile wallet providers to enter the cryptocurrency industry. As discussed, cryptocurrency investors are looking forward to decentralized exchanges to sell and buy cryptocurrencies. PayPal uses a decentralized network that makes it a safe option for investing in cryptocurrencies.
As we move down the line, we can witness more e-wallets providing cryptocurrency integrations to their customers.
5. The Increasing Number of Decentralized Exchange Platforms
One of the best cryptocurrency trends to invest in 2021 is new decentralized exchange platforms that allow the transaction of digital coins. For example, Check Into Cash is a US-based financial services company that offers the buying and selling of digital coins.
As we step into the new era of crypto, one can expect the growth of decentralized exchange platforms. As of now, most cryptocurrency transactions require an intermediary. These decentralized platforms will eliminate this dependency.
These platforms are powered by blockchain technology and provide a secure cryptocurrency exchange environment. The rise of these platforms could result in the growth of prominent crypto coins like Ethereum and Bitcoin as the go-to medium for making payments.
6. STOs to Replace ICOs
As discussed, institutional investors are likely to enter the cryptocurrency market. But why? Why now, and what were they waiting for?
One of the major cryptocurrency trends today driving institutional investors is the increasing number of security token offerings (STOs).
Currently, initial coin offering (ICO) is the premise of cryptocurrency exchange. However, ICOs are unregulated, which puts investors at risk. It’s one of the reasons big investors were steering clear of investing in cryptocurrency.
STOs, on the other hand, are regulated by the SEC. They have limited exchange platforms compared with ICOs. Besides, company shares, investor benefits, and dividends support STOs, and they’re less vulnerable to fraud than ICOs.
ICOs have their benefits, but with ICO scams on the rise, the need for security and regulation has increased. STOs resolve this hurdle, encouraging more investors to be a part of the digital currency industry.
While it’s difficult to anticipate how the cryptocurrency industry will act in 2021, it’s certain that cryptocurrency is here to stay. And now, with institutional investors entering the market, we can expect some major Crypto Exchange Development and advancements in the cryptocurrency investment space.
If you’re a cryptocurrency startup, brace yourself for 2021. With cryptocurrency funding worldwide on the rise, 2021 will bring significant opportunities for crypto businesses.