What next for Institutional Crypto Markets?
Trends and Predictions 2021: Sign up to the CEO Fireside Chat
2020 Market Snapshot
2020 was anything but normal; with the Covid pandemic still not having an end in sight, we found new ways to work, keep in touch, and continue doing what we love, mostly online. We’ve witnessed crypto come of age in 2020 despite volatile cryptocurrency prices, with Bitcoin leading the way for resiliency in the face of the global economic turndown brought on by Covid. It has outperformed traditional markets like the S&P 500 and gold this year, indicating that cryptocurrency is able to decouple from macroeconomic movements.
And last year’s bull run proved to be different than what we witnessed in 2017 where it was retail investors and their fear of missing out driving the uptake. 2020 was about more sophisticated institutions and investors taking up longer positions. The pandemic it seems has caused everyone to reevaluate their attitude towards cryptocurrency. From US banks now being able to custody crypto and fund managers finding novel ways to incorporate cryptoassets into their portfolios and strategies to large scale corporates like PayPal bringing crypto to 28 million merchants and more regulation being introduced as a catalyst to spur broader institutional adoption. All a clear indication the market is maturing and finding its place.
The investment case and maturation of Ethereum’s DeFi ecosystem in 2020 is further testament to crypto rails finding its niche in today’s financial services landscape. At present DeFi stands at a record USD$23 billion in total value locked, exceedingly surpassing its initial prediction of hitting USD$5 billion in 2020. High yield and risk-free strategies through staking on DeFi projects has been the key preemptor for uptake by institutional investors with lending platforms like Aave and Compound and DEXs featuring as the breakout categories of 2020. Ethereum’s launch of an upgraded proof of stake network, ETH2, has already seen USD$1 billion staked on the platform becoming the fourth largest staking network in the industry.
As we enter 2021 on somewhat of a high note with crypto markets having briefly surpassed the USD$1 trillion mark for the first time ever, the world as we know it is at a significant turning point politically, economically, financially and technologically. Predicting what the future may hold against that backdrop is an important exercise for businesses looking to plan ahead or enter crypto markets in 2021. As decentralised finance and cryptoassets becomes a principal focus for both investors and companies alike, custodians like Trustology and financial service providers like BCB group will ease their entry, making DeFi and blockchain the future of finance.
Sign up to watch the BCB Group and Trustology CEO Fireside chat on 28 January, 13:00 pm BST. Covering everything from regulation and the Bitcoin bullrun to ETH 2.0 and Central Bank digital currencies. What does the road ahead look like?
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