The traditional financial system as well as the economy took a major blow in the year of 2020 with a massive pandemic unfolding its consequences to this day, with lockdowns, restrictions and fears of a global recession. In these times of hardship and with a tumbling economy, investors nowadays turn to alternative financial assets such as cryptocurrency, rather than traditional financial assets. These changes suggest that in 2021 there will be major shifts in the existing financial system, paving the way for further adoption of cryptocurrency.
After electricity, internet and machine learning, blockchain technology is considered to be just as transformative and groundbreaking, so it’s only a matter of time until big institutions implement this technology as well. Companies such as JP Morgan, Mastercard, Visa, PayPal and many others already had their share in the crypto industry and many will follow soon – it’s not a question of if, but when this shift will take place. Nevertheless, after assessing this year’s trends, 2021 will most definitely be an exciting year for crypto traders and investors. So, what are the 3 coins to watch out for in the coming year? EuropeFX Review has all the much needed facts.
The definite crypto market leader and the benchmark cryptocurrency – Bitcoin (BTC) is the first coin to watch out for. Despite worrying fluctuations throughout the year, Bitcoin surprised traders and reached its all-time high – a whopping $24,200 in the last weeks of December. Growing institutional demand, a negative perception of the contemporary monetary policy and rising inflation are one of the main Bitcoin price drivers for 2021. All of these combined are making investors and institutions switch to alternative ways of protecting the value of their capital and cryptocurrency seems to be their best bet. Crypto analysts believe that the next 12 months will be very bright for Bitcoin, with predicted value set to surely surpass $100,000, maybe $170,000, or even $318,000 by some forecasts. Bitcoin was dubbed “digital gold” for a good reason – some experts believe that it will replace gold altogether as a store of value and a hedge against inflation. Given the prognosis for 2021, the demand for BTC will keep rising as this crypto takeover continues to unfold in the following months.
One of the best crypto candidates for investing in 2021 is definitely Ethereum, the second largest cryptocurrency in the world, with an overall capitalization of $68,127 billion and 380% growth in trading price in the last year. Ethereum is also known as the king of DeFi – the fastest growing crypto sector that transforms loans, insurances and savings plans, making them independent from centralized financial institutions. It’s worth was estimated to be $13 billion in 2020, which suggests tremendous growth in comparison to 2019, when the DeFi ecosystem was priced at $3 billion. All of this capital pouring into DeFi contributed to Ethereum’s title as one of the leading altcoins out there, holding 96% of all transactions in this sector. Additionally, an interesting thing to note is a distinctive copycat pattern between ETH and BTC, which can easily be noticed in the fluctuations that occurred in the data from the past few months, especially the last record breaking weeks of December.
The correlation to Bitcoin is not the only interesting thing about Ethereum – there’s also the recent launch of Ethereum 2.0. With Phase 0 complete and Phase 1 in progress since December 1st, this new version promises several technologies such as proof-of-stake, zk-rollups, sharding etc. With a rapid rise of DeFi applications that are entering the market, this update was needed in order to upgrade outdated systems and accommodate these applications. Ethereum is set on a path of revitalization that already brought back hope in this project among investors and once it’s finished, it will change the market furthermore.
The third digital coin to keep an eye on in 2021 is Ripple, and it was designed to facilitate and transform cross-border transactions. The goal was to create an alternative ecosystem that is 100 percent safe, instant and almost free. Back when it was conceived in 2013, the new platform got much attention from numerous financial institutions and was adopted in over 100 institutions a couple of years later. In 2020, Ripple blockchain expanded to more than 300 providers across 40 countries globally.
According to reports, Ripple and its distributed ledger technology (DLT) will become an alternative to SWIFT since it solves major issues, some of them being security, speed, cost, transparency, traceability and risk management. The true value of cross-border transactions, as the main use case of Ripple, has really shown its importance, especially during the ongoing pandemic. With that in mind, we can anticipate a boost in Ripple’s already massive partner list with several more impressive partnerships. With the support from European Commission, an upcoming transition to digital finance and plans of building a legal framework that supports the use of DLT technology and crypto assets altogether, the future of Ripple seems to be bright, so keep a look out for this coin.
In conclusion, if you’re looking to invest in cryptocurrency, this overview of the top 3 cryptocurrencies to watch out for by EuropeFX Review made it clear that converting your assets into digital coins is the way to go in 2021. As the most turbulent year we can remember finally wraps up and comes to an end, cryptocurrency proves that it’s resilient to disastrous turmoil’s in the economy brought on by the pandemic. Furthermore, if you’re planning to diversify your investment portfolio, opting for cryptocurrency as an alternative asset type can prove to be potentially lucrative in the coming year, so keep an eye out for these three coins; dedicate your time and energy into creating an elaborate investment strategy and finally, keep your capital safe and make significant sums of money.