Bitcoin Suisse: These are the top 5 crypto trends in 2021
The crypto ecosystem is in a state of flux. The new Crypto Outlook from Bitcoin Suisse shows which trends and topics will shape the digital financial market this year.
The past year was in many ways a decisive one for the crypto economy. The crypto market not only withstood the uncertainties of the pandemic, but also emerged stronger from the crisis. Mass adoption has taken a big leap forward with Bitcoin Up payment providers like PayPal and Square. At the same time, companies like MicroStrategy are testament to the private sector’s ever-growing confidence in digital assets. According to the latest Crypto Outlook from the Swiss crypto finance house Bitcoin Suisse, there is no sign of stagnation this year either.
Institutional investors discover the crypto market
Unsurprisingly, this crypto year is also dominated by institutional investors. Bitcoin in particular has matured as an asset class in the past year and is increasingly finding its way into the portfolios of professional investors. For example, Bitcoin has finally “become an investable asset” whose performance, with an annual increase of 300 per cent, puts established asset classes in the shade.
The standard question for portfolio managers seems to be changing from “Why should I invest in Bitcoin?” to “Why shouldn’t I invest in Bitcoin?”.
It all started with investors like Paul Tudor Jones, who announced a Bitcoin investment as an inflation hedge in a May 2020 investor letter. A number of other well-known investors followed, including Stanley Druckenmiller and BlackRock CIO Rick Rieder. With MicroStrategy, a listed company has also drummed up media attention for Bitcoin in the investment world. Last but not least, the massive BTC allocation of asset manager Grayscale is evidence of a broad rethink among investors.
This trend will therefore continue in 2021. Bitcoin is increasingly perceived as an alternative to gold “and cryptocurrencies in general as a bet on the future importance of blockchain technology in the world”. In addition, regulatory frameworks have been created to facilitate market entry. Accordingly, the environment for cryptocurrencies is becoming “increasingly clear”. Investors now enjoy greater legal protection for digital assets than they did a few years ago.
One side effect of this development is the increasing correlation to other asset classes. As the investor intersection between traditional and crypto financial market players grows and digital assets are “more regularly included in multi-asset portfolios” as a result, correlation with other assets could increase.
Staking trend
While the first major market trend is still primarily focused on Bitcoin, the second belongs entirely to the second largest cryptocurrency, or more precisely: the architecture behind it. The transformation of the Ethereum blockchain from a proof of work to a proof of stake-based consensus process thus acts as a blueprint for an overarching staking trend in 2021.