2020 has so far been a year that very few could have predicted back in 2019, even when the potential for a pandemic was becoming more and more apparent. Now, humanity is closing the same turbulent year that has seen so many changes, necessities, and disturbances, alongside full tragedies in the public health domain. As 2021 dawns closer, many are naturally inclined to consider what will the future bring in the space of cryptocurrencies. These in particular saw the most dynamic year on record, which cannot even be compared to the bull run of 2017.
However, as these predictions are taken into consideration, once again the well-known idea appears as well – making any kind of prophecy in the crypto domain is an almost guaranteed way for a person to end up like they do not know anything. But, with that in mind, the nature of the human condition is to seek patterns and rules, even in the unknowable future. With that concept in mind and the disclaimer about the assured fallacies these predictions bring with them, here is an overview of the most important anticipated trend in the crypto domain for the next 12 months.
China and CBDC
Central bank digital currencies or CBDCs are becoming a reality with an ever-growing pace of change. In the case of China and its PBoC, the same process is at a higher ladder of development than everywhere else in the world. In a country that is already at the forefront of tech development in an array of different domains, spanning anything from digital currencies to esports, this is not a major surprise.
The same goes for 2021 where China will keep hold of its top position in the CBDC domain. Other players in the same field will keep a close eye on all developments in China and in particular to the rollouts of retail-ready services, which already began in the country. With over 300 million USD moving through the PBoC digital currency, it is hard to imagine any other nation beating China in the next 12 months. That is why the question is which new services and abilities will this project present in that timeframe. Also, an even bigger question is which potential roadblocks it will encounter as well.
Institutions and Crypto
2020 was also an incredible year in regards to financial institutions slowly crossing into cryptocurrencies. The year saw the continuation of processes where entities like Standard Chartered and JPMorgan built crypto solutions for their clients, but also many other juggernauts of traditional finance began to cover crypto on a regular basis. This trend is on an acceleration course and 2021 will be no different. In that period, it is expected that many banks will begin to reveal their own crypto plans to the wider public.
While many of these were working on their crypto tokens for some time, 2021 is likely going to be the year when many decided to present those plans to their customers. Here, experts are pointing out that a lot of things will likely happen in the private bank industry. So far, the financial investment banks were at the forefront of this process, but the large pool of private banks also stands a chance to greatly benefit from the inclusion of things like bitcoin into their clients’ portfolios.
Clarity on Crypto Taxes
Wherever there are big profits, chances are that the tax collectors are not far behind. In the case of the crypto domain, profits have been more than apparent for years now. Even during the slow periods like the Crypto Winter, the money was still moving through the cryptocurrency markets in waste quantities. In the US, the IRS has been looking into crypto holdings for some time. In 2021, the level of taxation clarity on these issues will grow just as the taxation itself becomes more prevalent.
Other countries are following suit and trying to figure out the best way to both tax individuals and companies, but also to make the taxation rulesets more clear for everyone. That way, people and businesses that are considering an entrance into the field of making money with BTC might be more inclined to finally do it. Next year will be a period when the same taxation clarity comes to numerous countries around the globe and not just the US.
Retail Bitcoin Purchases
After years of roundabout solutions for purchasing and holding crypto, 2021 will more than any year before it offers simple and easy retail ways for purchasing cryptocurrencies. That will come to the forefront in the US in particular, after PayPal decided to roll out its crypto purchase, holding, and selling services. 2020 also saw a huge increase in active wallets that are holding one or more cryptocurrencies.
The buying ease is also putting a level of positive pressure on crypto miners. In the US alone, Square and PayPal are buying nearly all newly created bitcoin tokens. The same bitcoin is going to the US customers, as the present crypto consumption in the country is not trending down. This is why the next year is guaranteed to break all previous crypto wallet records.
More Traffic for Decentralized Finance
Many were correct back in 2019 when they stated that DeFi, or decentralized finance, will explode this year. The same even occurred with some seismic tremors in the cryptocurrency market as a whole. This year, despite the pandemic and the overall drop in industrial production, the value of all locked tokens in DeFi grew by more than 15 times. It started the year at around one billion USD and is presently in the range of about 15 billion USD.
Often, DeFi exchanges are seeing more action on a daily level than the big traditional counterparts. 2021 will in all likelihood be kind to crypto DeFi as well. In that timeframe, it is not likely that big institutional investors will appear on the DeFi scene. But, that will not stop developers from creating exciting new services and features in this field. Of course, the regulatory bodies across the globe are also paying more and more attention to these companies and ventures. But, even with higher oversight, the potential of DeFi is only going up in the coming 12 months.