Will 2021 be even bigger for Bitcoin? Here are the crypto trends to watch next year
It’s been a wild and unpredictable year in so many ways. That being said, our preview of 2020 was surprisingly accurate. DeFi boomed, institutional investors flooded in, and the halving went off without a hitch.
So what about 2021? Bitcoin hit a new all-time high in December – will the momentum carry into the new year? Is the retail crowd set to rejoin the party, or will institutional investors continue to dominate the narrative around crypto? Will Peter Schiff finally become a convert?
The Luno Team and I have dusted off the crystal balls, reviewed the events of the last year, and taken a look at what’s on the cards for the year to come. What do you think’s going to happen? These are still such early days and the possibilities are endless. The night is young and the party is only just getting started – you’ve got your invitation, make sure you don’t miss any of the fun. It’s not too late to be early.
Institutional investors continue to flock to the space...
Institutional investment in bitcoin was the headline news of 2020. Companies both big and small moved huge percentages of their cash reserves into bitcoin, including the likes of MicroStrategy, Mass Mutual, and Square. And if recent announcements are anything to go by, they’re only just getting started.
However, as exciting as it’s been to watch them pour into the space over the last year, the numbers are still relatively low. In 2021, the success (or not) of their decisions will become clear. This could motivate a whole new wave of institutional investors to follow their lead. MicroStrategy’s $425 million investment in bitcoin, for example, has already more than doubled in value (as of 18 December 2020). These are numbers that will interest any business or investor.
Furthermore, cryptocurrency and investment platforms (such as Luno) are already making it even easier for institutions to get involved. The recent news that the S&P Dow Jones Indices — a joint venture between S&P Global, the CME Group and News Corp — will debut cryptocurrency indexes in 2021, for example, should put crypto in front of even more investors on a daily basis. Exciting times!
...and will sovereign wealth funds get ready to make their move?
The next big game for bitcoin is sovereign wealth funds and governments. Will they be ready to make a public investment into bitcoin next year?
It’s actually technically already happened, albeit not directly. The Norwegian Government Pension Fund, also known as the Oil Fund, now owns almost 600 Bitcoin (BTC) indirectly through its 1.51% stake in MicroStrategy.
An open and public investment by such an entity would be a show of trust that could set off a frenzy of government FOMO. If institutional investment brought mainstream respectability to Bitcoin, imagine what the backing of a sovereign wealth fund or government would do?
Mainstream media attention returns
The recent bull run has certainly gotten people talking, but compare the media attention in 2017 to this time around. It’s been limited, to say the least. So what gives?
One reason is that this bull run has been driven primarily by institutional investors. This has often meant crypto news landing on the lesser-spotted business pages. The mainstream media’s attention has also, understandably, been elsewhere – pandemics and contentious presidential elections have a tendency to dominate the news cycle.
But there are signs this is changing. December’s new historical all-time high has brought with it a significant amount of positive coverage across major publications, including The New York Times, The Daily Telegraph, and The Independent.
If the bitcoin price continues to rise - as many suspect it will - this may drive another wave of headlines and again cement cryptocurrency firmly on the front pages. This puts cryptocurrency firmly back in the public consciousness, potentially lighting a fire under consumer demand...
...and the retail market comes back with a vengeance
A close look at recent Google Search Trends reveals an interesting quirk – the price of bitcoin managed to achieve its latest all-time high without anywhere near the level of consumer curiosity we saw in 2017.
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