Bitcoin Expectations: 2021

“It is well enough that people of the nation do not understand our banking and monetary system, for if they did, I believe there would be a revolution before tomorrow morning.” - Henry Ford This year started in a positive way for bitcoin investors. Since the beginning of the year, the market has been on the bull run, creating different views about cryptocurrency. A few days ago, bitcoin reached an all-time high of $40k, prompting experts insinuating that the digital currency might reach the $50k milestone.

However, this bull run has come with lots of thunderbolts. Some of these surprises took the market by shock while other ones were predicted. One of the major events is the fiat currency inflation, which has created a lot of ripples in the market. 

In this post, we will be discussing the future of Bitcoin in 2021, and why one should consider investing in the digital currency. 

It’s been over a decade since the concept of cryptocurrency came into existence and it’s a direct message that the cryptocurrency market has come to stay. The events of the past few years have shown that the cryptocurrency market is going to experience a tectonic innovation across all sectors. Despite the various Bitcoin price fluctuations witnessed in the past, Bitcoin has continued to gain worldwide popularity. The digital coin has continued to draw the attention of investors and has led to numerous investments in the cryptocurrency as a hedge against inflation. From our perspective and the market projections, here is what we see will happen in 2021 and why you should invest in the digital coin, Bitcoin. 

Bull Run Continuation

The surge in the price of Bitcoin cannot be overlooked. Since the beginning of December last year, we have seen a bullish run in the price of Bitcoin. This bullish run has quashed all the questions over the uncertainty in cryptocurrency. With the wide mainstream acceptance by individuals and investors, we expect the bull run to continue. A few days ago, bitcoin reached a spectacular all-time high of $41,962.36, more than double the $20,000 peak of the 2017-18 boom.

With the global economic crisis caused by the COVID-19 pandemic and the political chaos, we are not surprised by Bitcoin’s rise as it acts as a store of value and hedge against inflation. Individuals and investors are now looking for ways of having autonomy when it comes to their financial futures. To secure the financial future and truly have financial freedom, Bitcoin has certainly paved a new path.

The Rising Inflation from Fiat Currency

The COVID-19 pandemic created a lot of ripples in fiat currency, leading to a rise in inflation in many economies. For example, over 20% of circulating US dollars were printed only in the year 2020. It has led to people shifting their attention to the digital currency where they will have full control over their assets without losing the buying power. With the prolonged pandemic and economic crisis around the globe, we expect a continuous rise in inflation all around the world. The lockdown imposed by countries and the rising loss of jobs could lead to more inflation. All these substantial reasons why cryptocurrencies offer the right solution we’ve all been looking for all our life.

More Adoption from the Public

Even though bitcoin’s popularity is soaring high, a larger section of our society is yet to be introduced to the concept of cryptocurrencies. At the same time, there are people who have diverse views or are skeptical of Bitcoin. 

However, one striking evolution we witnessed last year was the announcement from PayPal in August. PayPal revealed that they were going to allow their users to buy and sell a bunch of cryptocurrencies including Bitcoin on their payment platform. This single announcement drew worldwide attention to Bitcoin, opening new doors for retail investors. Another prominent fintech company, Square’s investment, also announced that it had acquired $50 million in Bitcoin last year. It prompted more insinuations that Bitcoin is going to get more adoption from the public. 

All these events have shown that more investors are investing in cryptocurrency every day. This year 2021, we might be seeing more public adoption of bitcoin. We might also see some banks enabling bitcoin purchases or agreeing to hold digital assets for their clients. 

So, expect more public adoption of bitcoin and also more innovations in the crypto sector. 

Bitcoin as A Store of Value

Even though the value of Bitcoin is not directly tied to any real-world currency or monetary policy, it can also appreciate and depreciate in value. 

Lately, there’s been a buzz about Bitcoin as a store of value. During the course of human civilization, only gold came as close to a store of value, and now intellectuals and business owners are seeing another potential of Bitcoin. 

Bitcoin’s prominent feature of capped total supply, thus true scarcity has made Bitcoin an excellent, perhaps the planet’s best store of value. The total supply of Bitcoin is limited to 21 million, not more, not less. Furthermore, the network is decentralized enough to allow security to holders. It can also be used to hold and transfer value, just like in the case of gold. 

However, it will still need to prove itself as a safe haven asset. For now, it is still too early to conclude as things could go both ways. The adoption of Bitcoin could increase in the time of economic downturn, and it could also be used as a store of value by minority groups during difficult economic situations. 

However, Bitcoin has proven itself as something that has come to stay. Any investment in digital currency could serve as a store of value in the future.

New Mindset from the Public

The publicity that the digital currency has garnered over the years has helped the cryptocurrency increase in value. For example, Bitcoin was trading for $1 in the first quarter of 2010 when few people knew the cryptocurrency. However, as the years went by, the digital coin started gathering publicity. Investors began to research about cryptocurrency, leading to the rise in the digital coin. 

Right from the bubble in 2017, which led bitcoin price going to an all-time high of $20,000 to bitcoin becoming a great asset in 2020. All these have been made possible due to the surge in the popularity of digital currency. 

We are also assuming the same feat witnessed in 2020, where the price rose to an all-time high, will be repeated in 2021. So far, the bullish run is coming back to life again. 

Investment from Big Tech

The accomplishments and various innovations in the cryptocurrency have pushed many big techs into looking in the direction of digital currency. 

The majority of the companies in the payment sector and eCommerce have realized that there is still a market to explore for cryptocurrencies. However, many strategies and measures need to be put in place before such transactions can be initiated. It is due to bitcoin’s decentralized nature, which might take days to resolve different transaction issues. 

However, Bitcoin and blockchain tech in general has shown that if utilized, it can solve global financial issues. With a massive global reach, big tech companies such as Facebook and Google have moved forward with big digital currency plans. 

Earlier last year, Facebook announced that it was creating a digital currency, Libra. However, the project is yet to see the light of the day. But we believe that more private companies will look into the cryptocurrency sector this year. 

So far, data retrieved from crypto analytics platform, Bybt revealed that Grayscale had a total of 576,650 Bitcoins as of December 21, 2020. However, the amount increased to 588,970 Bitcoins a day later. It means that there was an increase of 12,320 Bitcoin within 24 hours. It shows that more hedge funds are being put into cryptocurrency. More investors are converting their assets to the digital currency, which will likely lead to more Bitcoin adoption this year.

Lightning Network Innovation

Lightning Network (LN) is aimed towards solving the stability issues of the Bitcoin blockchain by building a second layer solution. Therefore, the Lightning Network provides the solution for users to transfer Bitcoins in real-time without any transaction fees. Thus, making the micropayments in Bitcoin easy and feasible.

The Lightning Network makes it possible by leveraging sidechains to facilitate instant payments. These sidechains are called payment channels. Thus allowing users to make as many micropayments in real-time by keeping the transaction stay off-chain from the blockchain network. This second layer of ledger only writes opening and closing transactions data over the main blockchain.

lightning network Bitcoin

So, with the lightning network innovation, Bitcoin transaction processing will be faster. It will also lead to more adoption of Bitcoin for online payments. Hopefully, one day, Bitcoins will be used for retail, new adoptions, online shopping and much more.

So what are your predictions about bitcoin this year, 2021? Do you think that Bitcoin is worth investing in?

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Written by:  Narender Charan

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