Portfolio Group https://portfoliogroupinvestment.com Commission-free Stock Trading & Investing App Thu, 18 Feb 2021 09:38:38 +0000 en-US hourly 1 https://wordpress.org/?v=5.9 Bitcoin surpasses $50,000 for first time ever as major companies jump into crypto https://portfoliogroupinvestment.com/bitcoin-surpasses-50000/ https://portfoliogroupinvestment.com/bitcoin-surpasses-50000/#comments Wed, 17 Jan 2018 09:54:03 +0000 http://portfoliogroupinvestment.com/?p=1

Bitcoin hit a record high of more than $50,000 on Tuesday, continuing its blistering rally as major companies appear to be warming to cryptocurrencies.

The world’s largest digital currency by market valuable rose more than 3 percent to an all-time high of $50,389 just after 7:30 a.m. ET, according to data from Coin Metrics.

Bitcoin has had a boost from news of large firms like Tesla, Mastercard and BNY Mellon warming to cryptocurrencies. Tesla last revealed it had bought $1.5 billion worth of bitcoin and plans to accept the digital coin as payment for its products, while Mastercard said it would open up its network to some digital currencies. PayPal and BNY Mellon have also made big moves to support crypto.

Tesla’s use of corporate cash to buy bitcoin sparked speculation over whether other major companies would follow suit. Uber CEO Dara Khosrowshahi last week told CNBC that the company had discussed but “quickly dismissed” the idea of buying bitcoin. The firm is however considering whether to accept cryptocurrencies as payment.

These developments have led some crypto investors to believe the latest bull run is different to rallies past. Bitcoin skyrocketed to nearly $20,000 in late 2017 before losing more than 80 percent of its value the following year. Bitcoin believers say that, whereas the 2017 bubble was driven by retail speculation, the current cycle is being fueled by demand from institutional investors.

“I think bitcoin is a much more stable asset class today than it was three years ago,” Michael Saylor, CEO of enterprise software firm MicroStrategy, told CNBC’s “Street Signs Asia” program on Tuesday. “It used to be dominated by leveraged retail traders … on international markets with a lot of leverage.”

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Bitcoin Accelerates, Rallies Above USD 51,000 https://portfoliogroupinvestment.com/bitcoin-accelerates/ https://portfoliogroupinvestment.com/bitcoin-accelerates/#respond Wed, 10 Jan 2018 11:39:02 +0000 http://fw.wedesignthemes.com/?p=12711

The most popular cryptocurrency, bitcoin (BTC) hit USD 50,000 three times in less than 24 hours and on the third attempt it surpassed USD 51,000 before correcting lower. (Updated at 08:50 UTC with the latest market data. Updated at 10:36 UTC with the latest market data and comment from JPMorgan.)

At the time of writing (10:34 UTC), BTC trades at USD 51,444, correcting from its new all-time high of USD 51,616, per Coingecko.com data. The price is up by 5% in a day and 11% in a week. It increased its monthly gains to 45% and rallied by 418% in a year.

BTC price chart:

Bitcoin Accelerates, Rallies Above USD 51,000 102
Source: coingecko.com

This morning, ethereum (ETH)altcoins have also started moving higher, trimming their daily losses.

“There are a number of reasons why bitcoin is soaring, but what stands out most is the trend that MicroStrategy started and Tesla popularized: moving institutional balance sheets into bitcoin to hedge against inflation,” Nicholas Pelecanos, Head of Trading at NEM, said in an emailed comment.

According to him, this is just the start of a trend that could see billions of dollars flow into the crypto space over the course of 2021 — all at a time when the supply is becoming extremely squeezed.

“The total amount of bitcoin on exchanges has reduced by a third-year on year, which means the upside moves will continue to be aggressive. USD 50,000 is euphoric, but I wouldn’t be surprised if the price doubled again within a year,” Pelecanos said.

Bitcoin Accelerates, Rallies Above USD 51,000 103
Source: markets.chainalysis.com

Meanwhile, Rob Levy, Co-founder and President of Hxro, a crypto derivatives trading platform, this bull market is different.

“This is not a speculative, retail-driven mania. On the contrary, this is very much institutionally driven. It is no coincidence that it comes on a day that MicroStrategy announces another USD 600m debt offering which will be used to buy more bitcoin. True institutional adoption is accelerating at a remarkable place. That is more important than arbitrary price levels in USD,” he said.

However, bitcoin’s volatility needs to ease to prevent the rally from fizzling and the current price “looks unsustainable,” JPMorgan Chase & Co strategist wrote in a note Tuesday, as reported by Bloomberg. According to them, the BTC prices this year “appear to have been more influenced by speculative flows.”

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A Wave of Giants Rushing to Invest in Bitcoin Could Derail the Stock Market https://portfoliogroupinvestment.com/a-wave-of-giants-rushing-to-invest-in-bitcoin-could-derail-the-stock-market/ https://portfoliogroupinvestment.com/a-wave-of-giants-rushing-to-invest-in-bitcoin-could-derail-the-stock-market/#comments Thu, 18 Jun 2015 06:50:35 +0000 http://wedesignthemes.com/themes/resources/?p=1

After Tesla announced it has invested USD 1.5bn in bitcoin and expects to start accepting the cryptocurrency as a payment for its electric vehicles in the near future, the bitcoin price went soaring. It went from around USD 39,400 to an all-time high of over USD 48,000 in less than 24 hours.

The price is now up by over 50% in the first six weeks of 2021. Led by Elon Musk, Tesla’s investment is obviously in profit already: depending on the exact day of the purchase, it is likely to be worth over USD 2bn, pointing to a paper profit of over USD 500m. To put that in context, when the electric car-maker made its first-ever annual net profit in 2020, it was just over USD 700m.

The bitcoin price

Bitcoin price graph
TradingView

Tesla’s move into bitcoin comes on the back of a wave of institutional money invested in the leading cryptocurrency in recent months, plus numerous other companies putting it into their treasury reserves. With the world’s sixth most valuable company also saying it might buy and hold other digital assets “from time to time or long term”, it must be tempting for other major companies to do likewise. Since the Tesla announcement, Twitter finance director Ned Segal has already signalled that his company is considering such a move, while a research note from the Royal Bank of Canada has made a case for why it would benefit Apple.

The prospect of a bluechip invasion into bitcoin has caused much excitement among cryptocurrency investors. But if Tesla does trigger such a goldrush, there will also be some unsettling consequences.

Volatility spillover

Tesla justified this material change in the way it manages its treasury reserves by stating that investing in bitcoin will “provide us with more flexibility to further diversify and maximize returns on our cash”. Corporate treasurers have always used the money markets to invest surplus cash to eke out small yields, and it is harder than it used to be in the current long-term low-interest rate environment.

All the same, this is very different to standard money management. Bitcoin is a highly volatile asset that you would not typically associate with the cash reserves on the balance sheet of a listed company worth close to a trillion US dollars. As recently as March 2020, the price dipped below US$4,000. Even in 2021, the price fell more than 30% before its most recent surge.

Tesls logo in front of a bitcoin
Fomo-ing at the mouth? 24K Production

Tesla has put almost 8% of its reserves into the cryptocurrency. If AppleMicrosoftFacebookTwitter and Google were to do the same, this would translate into almost another USD 7bn investment. This is less than 1% of the total current worth of the bitcoin market, but the signal that it would send to other companies and retail investors would likely trigger a bull run that would make the current market look comparably stable. Some crypto analysts are already predicting that the price will rise to USD 100,000 or more before 2021 is out.

Such a rise would drive up the value of the bitcoin on corporate balance sheets to multiples of what it was at the time of investment. Tesla’s 8% allocation may already have gone up to 12% of the value of its reserves, for instance. And if it follows through on a potential plan to keep any bitcoins it receives for electric cars instead of converting them into dollars, that percentage could rise all the faster.

The problem is the potential effect on company share prices. Tesla’s share price rose 2% on the news of the bitcoin investment, though it has since fallen by 5%. But a longer-term example is US tech company Microstrategy. Its share price has ballooned tenfold in value in the past year on the back of a heavy investment into bitcoin, but is also down by almost a quarter in the days since the Tesla announcement.

Writ large, this could make stock markets far choppier in future – and vulnerable to a nosedive when the bitcoin bull market ends. It would be easy to imagine that this could prompt a wider wave of selling as investors sought to cover their loss-making positions, which could be very dangerous for financial stability.

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Bitcoin Snowball Is Expected To Hit More Institutions in 2021 https://portfoliogroupinvestment.com/bitcoin-snowball-is-expected-to-hit-more-institutions-in-2021/ https://portfoliogroupinvestment.com/bitcoin-snowball-is-expected-to-hit-more-institutions-in-2021/#respond Thu, 18 Jun 2015 06:45:55 +0000 http://wedesignthemes.com/themes/resources/?p=87

Institutionalization, professionalization, commercialization, and inclusion of bitcoin (BTC) in portfolios of hedge funds, treasuries and others is likely to continue its upwards trajectory, providing BTC with endorsement, recognition, and validation, further leading to adoption and price appreciation, according to industry insiders talking to Cryptonews.com.

The institutionalization of cryptocurrency was the emerging theme of 2020, said Seamus Donoghue, VP Sales and Business Development at METACO, a provider of security-critical digital asset infrastructure for financial institutions, adding that, while the investment focus has largely been focused on BTC, ethereum (ETH) “will likely be a high beta alternative to the dominant narrative of Bitcoin as an institutional investment asset class.“ He said it’s possible for the same Fear of Missing Out (FOMO) which pushed retail into crypto and BTC’s price to its all-time high in 2017 to be replicated in 2021 as institutional FOMO.

He added that an acceleration in institutional money coming into BTC would have “a much larger and profound impact on the long term valuation of bitcoin–the risk is for a parabolic move in Bitcoin’s price in 2021.” It’s Donoghue’s opinion that,

“We are now at an inflection point where allocations to bitcoin will accelerate into the mainstream in 2021 and bitcoin will become an essential allocation for any institutional portfolio.”

2020 was the year when bitcoin started being taken seriously by some large corporations, retail investors, and institutional investors.

“This has set us up for a huge 2021 and beyond,” when we may see crypto investment “exploding in growth as more funds start adding it to their portfolio, more companies start accepting it as a payment method, and governments putting some positive regulation around it,” according to Tim Bos, CEO of ShareRing, a decentralized sharing economy and self-sovereign identity platform.

And Sinjin David Jung, Managing Director of IBMR.io (International Blockchain Monetary Reserve), stated that “adoption will be meteoric in 2021 now that bitcoin has been adopted by institutions.”

“Ultimately the true added value is simply that when people or institutions are buying into bitcoin, not because they mined it, but with actual cash at the current valuation, that creates a very established monetary system which really bitcoin now has become. The world’s immutable global independent sovereign ledger,” he said.

 

There are many more positive expectations shared by experts. Eric Wall, the Chief Investment Officer of the crypto hedge fund outfit Arcane Assets, told Cryptonews.com that “it’s quite clear that bitcoin is making rapid progress in that it’s becoming an asset class that’s suitable addition to many investors’ portfolios.” Wall finds that the professionalization of bitcoin, as well as its inclusion in the portfolios of hedge funds, high-net-worth individuals, family offices and corporate treasuries is likely to only accelerate in 2021. “Retail investor adoption is likely to track this development,” he said.

Speaking of which, Erick Pinos, Americas Ecosystem Lead at open source blockchain Ontology (ONT), said that more large financial institutions will publicly announce that they have moved funds into BTC in 2021, which “will create a snowball effect not only for other large institutions to follow with their funds but also for the retail market to start moving more personal wealth into bitcoin.”

Seamus Donoghue added that retail will “play no small part in crypto” as they are given increasingly easier access to the markets. It’s bitcoin’s performance that will drive the narrative and, if the institutional market evolves as expected in 2021, rapidly expanding on-ramps will only add fuel to the fire. “Institutional investor adoption drives the build out of institutional infrastructure to support bitcoin’s adoption. This in turn provides the foundation for retail investment vehicles and retail on-ramps,” he said.

‘Wall Street smells opportunity’

While Will Liu, Head of decentralized protocol SAGA, argues that “in 2021, it is obvious that Bitcoin has earned its place in Wall Street,” Dave Perrill, CEO of ComputeNorth, also sees crypto attracting Wall Street’s attention, given that millennials are adopting digital assets as a currency and as an investment asset class, saying:

“Wall Street also smells opportunity, as firms finally realize that there is money to be made in digital currencies. […] Look for several new investment opportunities for main street investors to participate in digital assets.”

As Dave Hodgson, Chief Investment Officer at NEM Group and Managing Director at NEM Ventures, finds that crypto was being “adopted in increasing volumes” in 2020, Nangeng Zhang, CEO of major bitcoin mining hardware provider Canaan, noted that “unlike earlier years, the current demand for bitcoin is fundamentally driven by the growing presence of Wall Street institutions through the form of investments via corporate treasuries.”

He gave the examples of companies like GrayscaleMicroStrategy, and Galaxy Digital investing in crypto, saying they “reflect a growing appetite for bitcoin among institutional players but also the asset’s credibility in the eyes of traditional firms.”

Adding Square to the mix, Seamus Donoghue said that “treasury management has been turned upside down” as treasurers try to find a strategy to manage their liquid assets at a time of global negative rates and quantitative easing, and “Bitcoin is gaining favor as an alternative to fiat money markets or fixed income investments.”

And that’s not all, Nangeng Zhang reminded that investment management firms, such as Ruffer, have “jumped on the bandwagon,” while to meet growing demand, S&P Dow Jones Indices announced that it would be launching crypto indices. Also, PayPal allowing its users to leverage crypto on its platform “shows a clear sign of acceptance among mainstream players,” providing a “critical” recognition, “with commercialization being a valuable form of endorsement for cryptocurrencies,” Zhang said, adding that in 2021, “I expect to see even more promising developments taking place.”

Matthew Gould of Unstoppable Domains also argued that we can expect more fintech companies like PayPal to “get more interested and involved with crypto inside their products,” while Blockdaemon CEO Konstantin Richter said that the trend of institutions and liquidity providers rapidly entering the space is “likely to continue, and increase momentum in 2021.” He added that thanks to the likes of PayPal offering crypto payments and the capacity to purchase crypto directly, more users will have access to experiment with BTC and other cryptocurrencies.

The financial sector’s adoption of crypto is more advanced than that of the corporate sector, Donoghue said, adding that if those firms that announced treasury allocations see their equity price outperform others, more firms will be sure to follow.

“In terms of hedge funds and asset managers, when end of year annual return leagues tables are published and early adopters see huge outperformance, it is certain that underperforming funds will be asked why they didn’t have any bitcoin exposure, he said.”

 

‘Don’t fight the Fed’

Meanwhile, Sinjin David Jung finds that “the pandemic for all its ills and devastation was the crisis that bitcoin needed because the added QE [quantitative easing] and exponential growth in the stock market created this understanding and this fear of how fragile the current financial system is and bitcoin became a very clear hedge.”

Philippe Bekhazi, CEO of stablecoin platform Stablehouse, also said that the COVID-19 pandemic “accelerated certain trends that were already well established,” such as bitcoin becoming “a type of digital gold against unrestrained money printing.” He expects to see further impact of the pandemic in 2021, for example payment networks based on BTC or ETH growing significantly as certain countries suffer economic downturns (such as Argentina, Venezuela, Iran, or Lebanon).

In the meantime, Dave Perrill reminded of a popular investment policy – “Don’t fight the Fed.” With president-elect Joe Biden assembling his economic team, Perrill said, the US Federal Reserve (Fed) will continue to print even more money to stimulate the economy and keep Biden’s campaign promise. “Increased inflation will continue the acceleration of the dollar decline and the smart money moving to digital currencies,” said Perrill.

Dave Hodgson argued that, if the US continues to expand quantitative easing, diversifying “seems like a sensible, even conservative, fiscal choice” – “and BTC would be one of those natural homes for liquidity seeking shelter.”

Antonio Velasquez, Head of Communications at Hermez Network, a scaling solution on Ethereum, also finds that “there are no signs of money printing stopping any time soon, so we could expect more and more investment funds, family offices, and high-networth individuals allocating chunks of their portfolios to bitcoin and ethereum, at first.” He added that,

“Nobody knows where prices will be, but we can guess that the constant fiat currency debasement will lead most cryptos to all-time highs.”

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2021 Hashed Blockchain & Crypto Market Predictions https://portfoliogroupinvestment.com/2021-hashed-blockchain-crypto-market-predictions/ https://portfoliogroupinvestment.com/2021-hashed-blockchain-crypto-market-predictions/#respond Thu, 18 Jun 2015 06:40:51 +0000 http://wedesignthemes.com/themes/resources/?p=89

I. Bitcoin

A solid and continuous Bitcoin (BTC) bull run is expected in 2021.

Since the inception of Bitcoin, the amount of BTC owned by the exchanges has steadily increased. However, starting from February 2020, institutional investors have started to withdraw large volumes of BTC from these exchanges for strategic long term holding. Such withdrawals have created pressure on BTC liquidity, and the sell-side crunch has driven up the BTC price since mid-2020 according to the chart below. We expect this trend to continue in 2021, and due to the decrease in BTC supply, the price of BTC is reasonably expected to align with the trend.

2021 Hashed Blockchain & Crypto Market Predictions 103
Amount of Bitcoin owned by crypto exchanges decreased since institutions started buying Bitcoin in 2020 (ref: CryptoQuant)

Grayscale in the US provides further evidence of the increasing institutional interest as it is a vehicle through which institutional investors have gained exposure to BTC. In early 2020, Grayscale started out with USD 2bn in assets under management (AUM), and the AUM rapidly grew to USD 20bn by late 2020. Most of its assets are concentrated in BTC, and it is expected that such a focus will be maintained.

Moreover, the CME recently overtook OKEx on the trade volume of futures, and the news indicates that institutional interest in Bitcoin will outweigh, if not already, retail interest as more players enter into the market through traditional entities. Combined with the phenomenon that more and more public companies such as MicroStrategy are directly purchasing bitcoin, the maturation of digital assets as an attractive investment asset class will naturally lend to more players seeking to hedge against the quantitative easing of central banks.

Amid such indicators, it is worthwhile to note that BTC’s total market capitalization has exceeded that of the stressed countries’ currencies such as Venezuela. In 2021, there may be even countries purchasing bitcoin as a reserve asset.

With these in mind, Hashed will be making the following predictions for 2021:

 

  • Prediction 1 — Bitcoin ETF will be approved for the first time in history.
  • Prediction 2 — The price of Bitcoin will test USD 100,000.

 

II. Ethereum

While the media has so far focused on the price of bitcoin in 2020, the price of ethereum (ETH) rose at a more rapid rate compared to that of Bitcoin.

  • BTC: USD 7,195 → USD 29,001 (4.03x)
  • ETH: USD 129.6 → USD 737.8 (5.69x)

The on-chain fundamentals of Ethereum have also dramatically improved compared to that of Bitcoin. As DeFi (decentralized finance) activities, or financial services and products within the Ethereum ecosystem, exploded with innovative experiments in 2020, on-chain transaction fees of Ethereum have exceeded those of Bitcoin.

2021 Hashed Blockchain & Crypto Market Predictions 104
Comparison between Bitcoin and Ethereum total transaction fees, 2020

Given such substantive use cases of Ethereum, it is only reasonable to expect that institutional investors will also diversify their digital asset portfolio to include ethereum. It is no coincidence that the CME Group will be launching ETH futures in February 2021.

As for the ETH 2.0 update, it is slowly but gradually achieving its development milestones. The fulfillment of Phase 0 staking target demonstrates the firm support of Ethereum core communities including both retail investors and institutions who participated in the staking.

It is also likely that financial institutions that have jumped into the crypto market early on will not only perceive ETH as an investment asset, but also realize its full potential to innovate the entire financial system given its smart contract and ETH-based cryptocurrency features. More robust and aggressive experiments on Ethereum could lead to revolutionary effects in 2021.

  • Prediction 3 — Ethereum price will reach new ATH.

(Note: At the time of writing the original text in Korean, the all-time high price of ETH was about USD 2,100 with a significant premium in KRW)

III. Stablecoin

Apart from China, there will be countries that start test operating CBDC (central bank digital currency), which will accelerate and enforce the digitization of conventional financial systems and assets.

CBDC is based on private blockchains and is easily integrated and applied to conventional financial institutions; however, using private blockchains means that CBDC will not be able to utilize the open-source ecosystem or develop innovative composability cases. Also, their origins cannot be free from the central government censorship debate. Given the conflicting philosophies between public and private blockchains, the expansion of CBDC may actually become the driving force behind the growth of public blockchain-based stablecoin ecosystems.

2021 Hashed Blockchain & Crypto Market Predictions 105
Stablecoin issuance on Ethereum amounting to USD 20B

For public blockchain supporters, it is only reasonable to expect that stablecoins will further gain importance in crypto exchanges, DeFi, and ultimately diverse areas of the fintech sphere including payment, remittance, investment, etc. In fact, since the Office of the Comptroller of the Currency (OCC) in the US has just announced that banks can use stablecoins in banking transactions, private financial institutions and banks will competitively seek to issue their own stablecoins and be forced to consider the benefits of decentralized systems.

In the end, it is likely that stablecoins issued based on algorithms or crypto collaterals such as DAI with sufficiently decentralized and operating entities will prove more successful than centralized stablecoins to withstand against time-and-time tested obstacles of abuse and censorship.

  • Prediction 4 — Stablecoins based on public blockchain will exceed the market capitalization of USD 100bn.

IV. DeFi

The growth of the DeFi sector in 2020 proved to the world that the on-chain protocol economy can go beyond the store of value feature of digital gold, and develop into a complex financial paradigm. Along with supporting trends such as the spread of diverse crypto asset wallet solutions, DeFi will integrate with more B2C fintech services and pursue a better user experience, ultimately leading to an increase in Total Value Locked in 2021.

High fees and lagging transaction confirmation speed, major downsides of DeFi, will be resolved through diverse Layer 2 projects and technologies such as zkRollup. And as these solutions are integrated into major DeFi projects in 2021, the interoperability among DeFi projects in different Layer 2 solutions or even different main chains will become the new focal points of interest with even more explosive potential.

Due to the early phase of smart contracts, DeFi applications leave more room for bugs than traditional applications. The inherent nature of DeFi applications that involves leveraging existing infrastructure components may be a contributing factor; however, these innovative attempts have also added significant complexity to the overall DeFi ecosystem. And as more experienced developers enter the market, it is likely that even more sophisticated products will become available. Andre Cronje, the founder of yearn.finance (YFI), is a good example.

This is not to deny that the world will witness more hiccups and hacks within the DeFi sector. But as the sector matures, the overall efforts of passionate developers and community members will culminate in a more robust architecture that keeps perfecting. In fact, we are currently witnessing more insurance protocols coming into the market, and once the ideal combination is reached between risks and risk management, the overall DeFi market has many reasons to flourish.

 

  • Prediction 5 — DeFi TVL will surpass USD 100bn.
  • Prediction 6 — By the end of 2021, DeFi tokens will be 13+ among the market cap top 50 tokens (i.e. 30%+ increase).

 

V. DEX (Decentralized Exchange)

In 2020, the annual total DEX transaction volume reached approximately USD 116bn. It is a 39x growth compared to how DEX performed in 2019. This trend is expected to grow as more DEXs migrate to Layer 2 in 2021. They are positioned to process even more transactions as they are equipped with better infrastructure: lower transaction fees and faster transaction speed.

2021 Hashed Blockchain & Crypto Market Predictions 106
2019/2020 DEX Monthly Trading Volume

In addition, we expect to see more newly created decentralized derivative exchanges. Crypto natives have already witnessed that futures transaction volume exceeding spot transaction volume among the centralized exchanges. This trend will probably persist in the DEX ecosystem too.

  • Prediction 7 — Total DEX transaction volume will grow to USD 500+ billion in 2021.

VI. Security Tokens

During his panel discussion with Brian Brooks, the Acting Comptroller of the OCC, Jay Clayton, the previous Chairman of the US Securities and Exchange Commission (SEC), stated, “if you talk about trading today, all trading is electronic…That was not the case 20 years ago…It may very well be the case that those all become tokenized.”

As many have anticipated for long, security tokens are gaining momentum in public awareness to become the superset of existing stocks. With appropriate regulatory developments, security tokenization can entail many immediate benefits superior to those of traditional stocks such as easier authentication, more efficient management, lower transaction costs, and even programmable issuances and distributions.

Security tokens may lay a technical foundation for ‘protocol economy’ — an idea of opening up governance and distributing fair compensation to platform economy participants. As the South Korean Ministry of SMEs and Startups announced that it will proceed with the protocol economy blueprint as its policy direction starting from 2021, we expect to see more countries and industry sectors paying attention to security token issuance and distribution and crafting relevant regulations and guidelines.

It is also important to note that such possibilities may not be limited to regulated government entities since as crypto exchanges seek to diversify their business models they may also offer token securitization for new business opportunities.

 

  • Prediction 8 — Some companies will start to issue certain portions of their own stocks as tokens.

 

VII. IPO & M&A

As the biggest US crypto exchange, Coinbase, announced its pursuit of IPO, we can expect more institutional money coming into the crypto and blockchain space. And this trend will lead to more vibrant M&As and IPOs of crypto and blockchain companies.

Such M&As and IPOs may also give rise to novel forms as mergers between on-chain DeFi projects can be more efficient and effective due to their very nature of interoperability. The result may prove to add more competition in the market and produce other beneficial synergies among different communities.

To illustrate, there are beginning signs of such opportunities as yearn.finance and Pickle Finance announced their merger. But unlike this particular incident where the merger was more of a marketing stunt rather than a fundamental integration both, there will be more substantial cases to witness in 2021.

 

  • Prediction 9 — Starting from 2021, there will be more blockchain company M&As including DeFi projects.

 

VIII. NFTs (Non-fungible Tokens) & Blockchain Gaming

Although the blockchain gaming industry did not see that much of a growth in 2020, gaming giants like UbisoftSquare Enix, and Atari are starting their blockchain gaming initiatives with their strong IPs. Indeed, 2021 may be a better year for the blockchain gaming industry.

With many content providers and entertainment companies exploring the idea of the metaverse, more research is being done on how to combine metaverse and NFTs. This experiment will lead to the issuance of unique digital avatars. For instance, The Sandbox is already experimenting with IPs like Smurfs and Care Bears for its NFTs.

Art is opening its door to NFTs as well. Dapper Labs is cooperating with Genies to create virtual avatar and goods ecosystems. In fact, a virtual influencer, Miquela, issued its NFT through crypto art issuance/brokerage platform SuperRare and reached a sale of USD 100,000. Also, the world’s biggest auction house Christie’s auctioned bitcoin-inspired art and associated NFT. As we see more frequent attempts to integrate NFTs into our lives, we may find a successful formula for NFT this year.

2021 Hashed Blockchain & Crypto Market Predictions 107
NFT of virtual influencer Lil Miquela

So far the NFT market has exhibited graduated growth heavily dependent on powerful individual contents and intellectual properties, which, to note, is contrary to DeFi which grew organically. While we are expecting various use cases of NFTs to emerge in bar gaming, it is extremely difficult to predict the magnitude of growth level of the NFT market nor use any metrics as a holistic index. However, at least we could estimate the extent of public acceptability of blockchain-based asset ownership certification by looking at the price of a single NFT being traded at the market. By far the most expensive NFT was an NFT character by Axie Infinity which topped USD 130,000 (ETH 300 at the time).

 

  • Prediction 10 — A single NFT will be issued at a price of more than USD 300,000 in 2021.

 

Appendix: Looking Back “Hashed 2020 Blockchain and Cryptocurrency Market Prediction”

2021 Hashed Blockchain & Crypto Market Predictions 108
\[The Korea Economic Daily\] CEO of the largest virtual asset VC in Korea “BTC will make a record-breaking rally next year” published 18 Dec 2019.

In this appendix, we are reviewing “10 Predictions of 2020 Blockchain and Cryptocurrency Market” which was presented during the Year-End Meetup at Hashed Lounge in December 2019, which was published by The Korea Economic Daily (Hankyung).

1. Banks and security companies will proactively enter the crypto market while complying with regulations.
→ O: As South Korea’s Act on Reporting and Using Specified Financial Transaction Information is drawing near to its enforcement, multiple Korean banks are entering into the virtual asset market. KB Kookmin Bank has formed a joint venture KODA — a virtual asset management company. In the US, every bank is able to provide a custody service on virtual assets under OCC’s guidelines.

2. Those exchanges under jurisdictions that failed to diversify business models will have to strive for survival.
→ O: Many small and medium crypto exchanges have gone out of business or bankrupt. We anticipate that not many companies will be able to acquire virtual asset business licenses under the Act on Reporting and Using Specified Financial Transaction Information which is due to become effective in March 2021.

3. Chinese digital yuan and its national blockchain that backs the system will be launched.
→ O: China’s blockchain network BSN (Blockchain Service Network) is launched and three of its cities are testing digital yuan.

4. Libra and other competitor blockchain platforms with global IT giants will be launched.
→ △: Facebook-led project Libra (now – Diem) has delayed its launching and is expected to be launched by early 2021 along with a single USD-pegged stablecoin. Celo represents itself to be the competitor of Libra, and it was launched with the participation of around 50 corporations. Kakao’s Klaytn and Line’s Link have successfully launched their mainnets, and they are focusing on expanding their businesses. Their native tokens have been listed on domestic exchanges, and Tencent and other China’s conglomerates are also taking their part in BSN.

5. Klaytn and Link will reach more than 10m mainchain monthly active users by accommodating the public of East Asia.
→ X: Both projects integrated crypto wallet services to their messengers (Kakao and Line, respectively) after launching their blockchain mainnets. However, no effective promotions or exposures to their users took place due to an immaturity of third-party dapp (decentralized app) ecosystems and regulations. We are expecting Klaytn and Link to proactively build their ecosystems in 2021.

6. DeFi sector total value locked (TVL) will grow to a value of more than USD 2bn and will attract 3 times more fintech start-ups than it is now.
→ O: DeFi sector TVL has grown to USD 15bn: it is 7 times more than what we have expected. Also, the engagement between DeFi and fintech/centralized finance services is growing at scale.

7. There will be blockchain games that have daily active users (DAU) of more than 30,000.
→ X: Growth in blockchain gaming was slower than we expected. In October 2020, Axie Infinity recorded 5,500 DAU.

8. Traditional venture capitalists (VCs) will start to make an equity investment in startups that create revenues with public blockchain ecosystems.
→ O: Onchain data analysis company, Chainalysis, listed its name as a unicorn start-up followed by a USD 100bn investment led by VCs such as AdditionAccelBenchmarket, and RabbitChai Corporation which grew rapidly with its partnership with Terra blockchain closed KRW 88bn (USD 80m) from traditional VCs through series A and B. Uniswap is considered to be a decentralized exchange with the most liquidity in DeFi as it raised USD 11m from a16z and USV even before issuing its own token. Compound, a crypto lending protocol, was also invested by VCs before issuing its native token.

9. Bitcoin price will be at all-time high.
→ O: BTC price is on a record-breaking rally both in KRW and USD.

10. There will be multiple BTC funds that retail investors can chip in.
→ O: In April 2020, a Bitcoin fund was listed for the first time in history in the Toronto Stock ExchangeBitwise Asset Management, Inc. also launched an index fund that tracks 10 crypto assets for American investors in December 2020. A number of financial institutions have already announced that they will launch crypto funds in 2021.

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