By: David Drake
2020 was a year full of unfamiliarities. COVID-19 was an uninvited visitor that barged itself into our lives and decided to wreak havoc on our fragile world. It caught all of us off-guard and forced us to accept this difficult reality. Several industries bore the brunt of COVID-19, and businesses were barely keeping their heads afloat. Millions filed for unemployment, the global economy went on roller-coaster mode, and government leaders were grasping at straws to regain control of their respective countries.
Drastic quarantine measures were implemented in the first part of the quarter, and it compelled us to put on our thinking hats and reevaluate our contingency plans to adjust to the new normal. News of vaccine developments became the ‘light’ under a very dark tunnel. We are now gingerly walking the long road to recovery and are cautiously trying to find a semblance of normalcy.
The financial world had its share of losses and surprises. The cryptocurrency industry, especially bitcoin, has shown resilience to the economic turbulence experienced by the global market, a positive development for the dedicated investors in this dynamic space.
To paint a picture of what’s in store for us this 2021, here are my predictions:
Bitcoin will continue to surge and ride out this global economic storm.
The demand for bitcoin has increased tenfold because institutions are now spending $100-$500 million to buy bitcoin through public companies like Grayscale Bitcoin Investment Trust. I expect it to hit $133,300 per bitcoin by the end of 2021 and go beyond that mark, afterward. Meanwhile, only 3% of 360 million PayPal users were tested in November and early December to buy bitcoin as this rolls out in PayPal with 360 million users, which is relatively 6 times more users than all bitcoin owners in the world. These kinds of demands will propel bitcoin higher since they are buying it on the open market.
The hedge fund world for crypto companies is still in the early stages.
I do not have enough experience to justify a lot of investments, as family offices and institutions require a minimum of 3 to 5 years in trading history, but I think the crypto industry for hedge funds still has years to go before we see consistency with some of the better ones. There is still a transparency issue in the industry.
More banks will be adopting processes and regulatory frameworks to handle bitcoin transactions.
Following the partnership between Visa and Circle Internet Financial, we are looking forward to more announcements from institutional investors that they can do custody and handle bitcoin transactions for their clients. The US is ordering the House to look into allowing banks to do custody, and that kind of mass adoption will be prevalent in 2022 as it grows. I think 2021 and 2022 will be the big years for the growth of crypto.
We need to keep moving forward. This is the time to find concrete solutions, alternative platforms, and new opportunities to minimize losses and properly navigate our businesses. Adaptation to new trends, regardless of how unfamiliar it may be, is one way to survive this ongoing crisis.