With the advent of the digital world, there is no doubt that the cryptocurrency market is increasing at a rapid pace. The total capitalization of the market of all combined cryptocurrencies is more than $1 trillion. More than 100 million users are a part of this community now. So there is a huge scope of improvement in this community if worked actively. Let us learn about the upcoming cryptocurrency trends that can be incorporated for better results in the crypto world.
Organizational Adaptation Of Crypto Environments
One of the upcoming cryptocurrency trends that can impact the crypto world is its use by large organizations for investments and asset allocation purposes. Earlier investing in cryptocurrency was considered skeptical. But the scenario has changed now. There are many organizations that are readily allocating their capital in the cryptocurrency environment.
It was calculated that by the end of 2020, nearly $15 billion organizational assets that were under management were assigned to the cryptocurrency class. And to show the drastic change, this same phenomenon by the end of 2019 was just $2 billion. This drastic change in the graph shows the appraisal of cryptocurrency now.
This whole thing was started when a 100-year-old insurer agreed to invest $100 million in Bitcoin. Adding to that companies like “Square” and “MicroStrategy” kept the business world to stare by adding parts of their cash reserves in Bitcoins.
DeFi Boosts More Use Cases
The whole concept of DeFi (Decentralized Finance) has taken a big leap with changing times. It has contributed hugely to the success of cryptocurrency. This idea is identical to the “traditional financial transaction” but in blockchains. Here smart contracts are used to lessen the interference of any external party.
The transaction in DeFi lies from “traditional lending” to “creating derivatives”. With the use of DeFi, the TVL (total Value locked) has grown from $2 billion to $15 billion in just a span of a year. There is an added good news, the growth of cryptocurrency with the use of DeFi is continuing to grow. Till this day it has grown to $35 billion from $15 billion. A huge leap is expected in the cryptocurrency community by the end of 2021.
Yield farming is the same as digital banking. Here the users deposit their fund in a pool system from where they can derive a certain amount of interest. This yield farming has received a great response from the users as they provide a high rate of interest in this low rate of interest environment. An example of a yield farming DeFi platform is “Compound”. It accommodates cryptocurrencies in a pool and provides the users with good interest.
Tokenization of NFTs
NFTs are non-fungible tokens. These are at huge demand right now. Unlike Bitcoin that does not resemble claims over any assets, NFTs act for claims like domains, collectibles, digital artworks, and many more.
This was created by the Ethereum blockchain and cannot be broken into small pieces. They represent the digital product. Like fungible tokens, these are not divisible. Because of the divisible nature of this market, it becomes difficult sometimes to calculate the total size.
Data have shown that the trading value per month rose by $9 million and is expected to grow more. The NFT sector of Ethereum saw a rise from $3 million to $33 million in just a span of a month.
As reported by DappRadar, the trading volume of Ethereum in a single week grew by 2.7 million in January. This whole concept was inaugurated by well-known marketplaces like “CryptoKitties” and “CryptoPunks”. They offered ownership over collectibles and digital assets.
There have been and are expected to be increased regulatory bars in the crypto market. ICO Craze in 2017 helped the government security. A question arose regarding the nature of cryptocurrency.
To draw more clarity, let’s look at the Ripple Case. In 2020, “Security and Exchange Commission (SEC)” charged a case against Ripple lab, claiming that the company provided approximately $1.3 billion unregistered securities and sold a good part of its cryptocurrencies to the public.
The Commodity Future Trading Commission (CFTC) also enacted civil enforcement against a well-known cryptocurrency company: BitMEX.
Expansion In Dapps Market
DApps stands for Decentralized Application. These are software that operates on a distributed peer-to-peer network. In recent times there is a huge possible market for Decentralized Applications. There are many DApps in the Ethereum network that work exactly like DeFi. An estimation done by DappRadder portrays that there has been an increase in the transaction of DApp from $21 billion in 2019 to $271 billion in 2020. This is how fast Dapp is grabbing the cryptocurrency market.
The Dapp transaction is more extended towards the Ethereum network. Nearly 95% of the transaction takes place in the Ethereum network.
Stablecoins And CBDCs Are Altering The Crypto Ecosystem
This is also one of the upcoming cryptocurrency trends of 2021 i.e the use of stablecoins.
The concept of stablecoin is growing rapidly, though the most famous stablecoin “Tether” is stuck at legal problems. The combined market value of stablecoin is calculated to have increased by 500% in the last year. Yes! It is that huge. Though the maximum of the market is grabbed by Tether, that doesn’t mean success cannot come from other arenas.
A lot of times DeFi uses stablecoins for its stability. On the other side, many central banks are wanting to form their digital currencies. Many believe that the expansion of stablecoin could help a complete era.
Central Bank Digital Currencies (CBDC) are tokens that are kept in to by a minimum of 80% of the central bank around the globe. The U.K was the first who announced such a project but it wasn’t the last. Many followed after that. If CBDC gets desired success, then this will be enough to “distract the international payment market”.
With the advent of Cryptocurrency, the world is surely seeing a change and with upcoming cryptocurrency trends it is seen that more developments in the coming year, it will change the definition of investment and buying for sure. Already many financial institutions have started investing in digital currencies.. Not only that, many central banks have already started thinking about launching their cryptocurrency. With this high trend towards the digital currency the financial market is surely going to see a huge change.