The year 2021 started with a huge boom of cryptocurrencies. Still, it remains unclear what will happen in the course of the year. Is the next Bitcoin bubble about to burst?Photo by André François McKenzie on Unsplash
Will Bitcoin and Co. reach new highs? Nobody is able to provide an answer to a question of this kind. Nonetheless, I’ve tried to compile a few indicators.Institutional Interest
The situation around Bitcoin and Co. changed in the last years. Institutional interest is significantly higher, while demand from speculative private investors is lower. In 2020, large institutions such as JPMorgan and Citi developed solutions to buy cryptocurrencies for their clients.
The trend is expected to accelerate in 2021, as many banks are already working on blockchain and digital payment solutions. This will ensure the entry of more players and attract conservative companies, which in the future will be able to invest in cryptocurrencies at their principal banks with a more comfortable gut feeling.
Also, major hedge funds made moves to get into cryptocurrency 2020, with Bitcoin leading the way. For example, the Guggenheim Funds announced a huge investment of $500 million in Bitcoin. More asset managers are set to follow, as prominent hedge fund managers such as Stanley Druckenmiller and Paul Tudor Jones caused a sensation when they finally stopped bashing bitcoin. In 2021, it is expected that large investment banks, pension funds, and asset managers will jump on the train and stock up on cryptocurrencies. Again, with Bitcoin leading the way. Since a variety of traditional financial instruments are now being linked with cryptocurrencies, major players can join the market too.Private Interest
In the course of 2020, many cryptocurrency exchanges evolved and became more mature. Binance, Crypto.com, Coinbase, Bitpanda— just to name a few.
Years ago, it was much more difficult to find reliable and usable exchanges. Additional...