The cryptoeconomy had a striking comeback in 2020, a year that marked the first significant bullish wave since 2018. What's changed in those few years? Quite a lot, indeed.
Cryptocurrencies are increasingly being seen as a protective measure against traditional assets, especially now that mainstream acceptance is growing. Moreover, major established institutions are becoming more involved, while fundamentals behind projects like Ethereum show remarkable progress.
When these elements combine, it’s apparent that the cryptoeconomy is moving towards 2021 with robust prospects. Thus, it's worthwhile to explore the notable advancements that are shaping this optimistic trend.
Launch of Crypto Indices by S&P Dow Jones Indices
The collaboration of CME Group, News Corp, and S&P Global under the S&P Dow Jones Indices umbrella is well-known for top stock indices like the S&P 500 and DJIA, and it's now entering the crypto index arena.
Announced last week, the S&P DJI-branded indices By utilizing data from the digital currency firm Lukka, they aim to provide comprehensive coverage of over 500 cryptocurrencies and tokens.
This initiative will allow S&P's clientele to tailor crypto indices, significantly increasing global investors' access to this innovative asset class. Mainstream adoption is in full swing!
Emerging “Precious & Industrial” Crypto Paradigm Shift
Renowned American investor Paul Tudor Jones (PTJ) has made a name for himself with his investment prowess.
PTJ's endorsement of crypto has raised eyebrows, especially following his substantial investment in bitcoin recently.
In recent times, PTJ's engagement with crypto has become more pronounced. For instance, during a Yahoo Finance interview, he discussed the rise of 'precious metal' cryptos like bitcoin and 'industrial metal' cryptos such as Ethereum. He elaborated:
PTJ envisions a future where cryptos mimic the metals market; with bitcoin as a precious crypto and transactional cryptos akin to industrial metals like copper and platinum.
If the markets continue rallying around BTC and ETH as 'precious' and 'industrial' crypto, prosperous times surely await.
Check minute marker 7:11 in the video for the cryptocurrency discussion.
BTC on Big Balance Sheets
Companies, including MicroStrategy, made headlines this year by incorporating BTC into their balance sheets.
How these corporate treasuries fare in the coming years remains a point of curiosity. However, MicroStrategy's BTC strategy may have set the stage for broader adoption.
MicroStrategy invested $50 million in bitcoin, buying roughly 2,574 coins at an average price of $19,427 each. Their holdings now include approximately 40,824 bitcoins. https://t.co/nwZcM9zAXZ
— Michael Saylor⚡️ (@saylor) December 4, 2020
As companies grow more involved with crypto, similar moves in the future are almost guaranteed. This trend can only bode well for the crypto market.
Visa and PayPal Have Arrived
A compelling theme in the cryptoeconomy this year is the engagement of major companies like PayPal and Visa.
Recently, PayPal's announcement of supporting major cryptocurrencies such as BTC and ETH before Visa's plan to integrate the USDC stablecoin on its network was big news for the crypto scene.
What does this mean? Major companies are showing a growing interest in Ethereum, expect similar moves in 2021.
Eth2 Staking
Three pivotal moments have shaped the cryptoeconomy: the introductions of Bitcoin, Ethereum, and Ethereum 2.0.
The cool news for us is that we just got to witness the activation of Eth2 on Dec. 1st, 2020. Since then, we’ve started to get a better sense of the returns that ETH 2.0 staking can offer. At the moment 17% is an average return we’re seeing.
Of course, the wild decentralized finance (DeFi) sector has plenty of yield farms that are more lucrative than that right now. Yet you have to consider the fact that 17% is way better than any mainstream returns right now, and Ethereum has no shortage of activist stakeholders who will stake ETH even if they could be making more in DeFi at the time.
I believe staking in Eth2 is highly promising for several nuanced reasons. This invites a new wave of participants into the crypto sphere. Stay tuned!
The Beginning of the DeFi Revolution
DeFi encompasses decentralized trading, savings, derivatives, and much more. It is experiencing a surge as newcomers increasingly adopt the technology.
Currently, DeFi's total value locked (TVL) is at $14.55 billion USD, nearing its all-time high of $14.8 billion. This growth is a significant leap from under $1 billion last year.
Although still modest, this growth signifies the immense potential of DeFi, which is just getting started.
NFTs Will Help Crypto Go Mainstream
Non-fungible tokens, or NFTs, were another significant sector alongside DeFi gaining traction within the Ethereum platform this year.
In essence, NFTs act as media legos — encompassing gaming assets, virtual land, and cryptoart.
While the NFT market is relatively small compared to DeFi, it has grown exponentially. These trends suggest that NFTs will continue to flourish, contributing to the broader appeal of crypto.
Conclusion
When all is said and done, the cryptoeconomy remains a mystery.
The market might appear bearish or bullish at any point, so thorough research is crucial. However, exploration may lead to the unmistakable conclusion: DeFi, NFTs, and social tokens are fundamental to the future.
Ignoring these developments means overlooking the trajectory that points to a monetarily crypto-dominated future.
