Cryptocurrency was hailed as the best asset class for 2020 after a sensational growth of approximately 800% in the past year. This achievement was led by the Bitcoin evolution, which spearheaded astronomical interest in the industry over the past two quarters. While early investors are enjoying the fruits of their patience, cryptocurrency’s latest string of successes has also invited newcomers to participate in the digital currency revolution.
As crypto continues to shatter records and make sky-high wins, what do these implications mean for you?
What Happened to Cryptocurrency in 2020?
2020 was a tumultuous year for the entire world, causing various industries to suffer and crash in response to the limitations set by COVID-19. But while stock markets suffered, cryptocurrency graphs surged upward: it experienced its best year yet, despite all odds.
When the global lockdown measures were announced in mid-March of 2020, the crypto market declined with prices at low peaks. But the market soon picked up after hedge fund investors gained an interest in pouring funds into Bitcoins and altcoins to counter the economic burden caused by the pandemic. There were three issues that cryptocurrency could counter:
- The value of fiat money could suffer due to extended lockdowns
- The value of fiat money could suffer after governments released trillions in stimulus checks
- There were fears over banks limiting account access due to massive panic withdrawals
Some of these fears were realised after a handful of governments, such as Egypt’s, started rationing banking access to control hoarding and inflation. Cryptocurrency allowed investors to keep their wealth without dealing with the nuances of the government and third parties, such as banks.
Cryptocurrency’s Explosive Comeback
The spike in investor interest over cryptocurrency and blockchain caused prices to pick up in October, and growth continued to trickle into 2021, bringing new all-time highs to the likes of Bitcoin, Ethereum, and more.
BTC gained an over-600% leverage from $7,397 to $56,508 in one year––and altcoins weren’t far behind. Players like Ethereum (ETH) and Dash (DASH) enjoyed a $1,050% and 350% increase in value, respectively, while Theta (THETA) saw a 16,000% skyrocket in the past month.
Now that the market has entered the late stages of its bull run and prices are starting to flatten, investors are making more conservative moves. This is due to fears of a massive plummet––reminiscent of 2017––where BTC dropped by 500% in a year. But it’s important to know that the current crypto landscape is different: even governments realise its importance in the world.
Governments are the biggest threat to cryptocurrency, but US lawmakers have reportedly acknowledged that it’s impossible to do a full-scale ban because coins are important global innovations. So, there’s massive potential for this industry to push its limits further over the coming years.
It’s Not Too Late to Shift Gears
Cryptocurrency has consistently been hailed as the best asset class due to its massive potential. Now that the market has taken off, and so many important institutional investors have joined the wave, some fear that it may be too late to profit––but it’s not!
While 2020 and 2021 have been important catalysts for growth, the industry is still in its early stages. People who invest now are still considered early adopters because cryptocurrency is young, new, and evolving. Shifting from stocks and hedge fund investments to crypto can still merit big profits if you shop smart and do enough research to make confident trading decisions.
There are other benefits to cryptocurrency being the best asset class. As more investors are interested in banking on this trend, it will eventually become a popular investment option, increasing the demand for coins. However, as most cryptos have a predetermined scarcity, prices are expected to grow to competitive levels in response to demand.
Mass Adoption May Be Underway
The biggest and most important challenge for cryptocurrency is to reach the mainstream market and become usable beyond investments––as an actual currency to buy and sell goods and services. While newer altcoins, such as XRP and Cardano, are making this happen with highly scalable frameworks, institutions are also helping this dream take off.
PayPal has recently expanded its cryptocurrency integrations to allow consumers in the US to buy and sell with coins, an update that’s expected to reach the global market soon. Visa didn’t lag behind with its crypto debit card upgrade, which no longer converts crypto to fiat money in the transaction process. Meanwhile, big retailers, such as Tesla and Starbucks, are now accepting––or testing acceptance for––cryptocurrency.
As more merchants start embracing coins, it won’t be long before you can start making instant payments anywhere in the world with BTC, ETH, LTC––and any other coin of your choice!
Cryptocurrency’s growth challenges the world to change the traditional transaction system and open up to a more secure and digital alternative. As its popularity grows, you can expect to see coins more frequently day-to-day, so there’s merit in learning about it now.