Despite the wild price swings in March 2020, Bitcoin closed the year very well-above its 2017 all-time high. In December 2020, the Bitcoin price jumped by 66.1%. Impressively, the astounding bitcoin price rally turned unstoppable after 17 December 2020, and bitcoin price crossed $34k.
All in all, cryptocurrencies benefited from a diverse set of cryptonews in 2020.
It started with the pandemic triggered quantitative easing that invigorated the fears of inflation. Effectively, investors ascribed cryptocurrencies as a hedge against inflation linked to stimulus measures. In the wake of unprecedented stimulus packages, the bitcoin prices surged. During the last quarter of 2020, bitcoin and cryptocurrencies finally appealed the institutional investors and they started piling into bitcoin.
However, between cryptocurrencies proving their immunity to geopolitical tensions and institutional embracing, a lot more has happened. And all this has shaped 2021 for an even stronger rally.
1. March Black Swan event
The price of bitcoin and other cryptocurrencies fell victim to COVID-19 on 12 March 2020 when overnight the price plummeted by over 50%. What we saw in March 2020 was the exact same thing that has happened to gold during times of economic crises. Basically, short-term investors were forced to liquidate their holdings to cover their positions. This proved that cryptocurrencies can serve as a successful hedge against volatility.
The event brought bitcoin and other cryptocurrencies to the knees within a couple of hours. However, it actually proved to be a short-term crisis and a long-term opportunity. It proved to the world that cryptocurrencies are actually resilient to geopolitical issues.
2. Bitcoin reaching an all-time high
In the first week of December, bitcoin prices starting teasing the markets by inching closer to the 2017 all-time high ($19.6k). On 17 December, it finally crossed the $19.6k resistance, and post that the rally turned unstoppable. It was a momentous event.
Interestingly, institutions started piling into bitcoin and the cryptocurrency price kept rallying. At the time of press, bitcoin is trading about 39.2% higher than its 2017 all-time high.
Bitcoin gained over 300% in 2020 and the altcoins followed. A strong 2020 has built a base for an even stronger 2021. According to Fundstrat’s Tom Lee, Bitcoin could quadruple in 2021. This is because the current rally looks like 2017 and a parabolic price surge should be expected.
3. ETH Staking initiated
2 December 2020 proved to be a monumental date for the Ethereum network. The cryptonews commemorated the launch of Ethereum 2.0. This marked the beginning of the live transformation of Ethereum from a proof-of-work to a proof-of-stake blockchain. Once it is completely built, the new Ethereum blockchain will enhance in terms of scalability, efficiency, and security.
This is just the first phase of development but it has brought along with it a new use case for ETH currency. As anticipated, ETH staking received an overwhelming response. According to the statistics, Eth 2.0 required 524,288 ETH to secure network operations. However, within 24 hours of its launch, Eth 2.0 received 66% more funds than were actually required. Interestingly, the number kept growing which positively impacted the rewards accrued by the validators.
After a series of delays, the Eth 2.0 Phase 0 was successfully launched in 2020. Now the team is completely focused on Phase 1 which marks the full-fledged transition to proof-of-stake. And this requires the implementation process of shard chains. According to the roadmap and cryptonews, the beacon will be shared in 2021 and the excitement around it is already translating into an ETH price surge. At the time is press, ETH is trading a little over $1,000.
4. Ripple (XRP) Crashed
XRP witnessed one of its biggest rallies in 2020. But all those gains were erased when SEC filed a sweeping lawsuit against Ripple. SEC argues that XRP is a security and has always been. According to SEC, XRP should have been registered as a security with the commission almost seven years ago.
As soon as the cryptonews was out, XRP started to crash. From $0.63 it plunged to $0.22 which is almost a 63.2% drop. The coin has one foot almost in the grave as leading exchanges like Coinbase, Crypto.com, and OKCoin have suspended the XRP trading.
Interestingly, Ripple and XRP are technically separate entities. However, Ripple owns a significant part of XRP’s market cap.
Experts fear by the end of 2021, Ripple, the company, might turn insolvent. However, there are two possibilities that can prevent that from happening. Firstly, Ripple raises money by selling XRP. Secondly, its other products aren’t profitable.
5. Ethereum killers launched
2020 witnessed the launch of Polkadot and Cardano Shelly and made cryptonews. According to the experts, these projects hold the potential to grab market share from the Ethereum network. Interestingly, both Polkadot and Cardano were founded by Ethereum cofounders.
Polkadot officially migrated to mainnet in July 2020. Since then, it has attracted numerous investors and has fought its way up to rank #6 on Coingecko.
Cardano’s blockchain underwent a momentous transformation on 1 August 2020 when it launched Shelley Mainnet. Since then, it has climbed up the leader board and currently ranks at #7 on Coingecko.
In the last 7 days, DOT, the native Polkadot token is already up by over 30%. Many big projects like Frontier, Moonbeam, and Acala are coming to Polkadot in 2021. Thus, the cryptonews is that DOT might receive a heavy price boost.
In the last 7 days ADA, the native Cardano token is already up by over 39.8%. Experts believe the mass adoption of ADA is just a couple of months away.
6. Unbelievable Institutional Investments
2020 was the year when bitcoin went institutional and these institutions are now becoming mega HODLers. Institutions like MicroStrategy, Grayscale, JPMorgan, and Goldman Sachs pocketed bitcoin to use it as a hedge against inflation in 2020. As the year went by, they became more bullish on bitcoin and led the current price rally.
Furthermore, PayPal introducing cryptocurrency support was one of the biggest cryptonews in space.
Fidelity reported that by the end of Q2 of 2020, almost 800 institutional investors owned 36% crypto assets. In fact, the number of addresses holding more than 1,000 and 10,000 Bitcoin has increased significantly.
According to the Fidelity reports, 90% of the 800 institutional holders will invest even high amounts in bitcoin in 2021.
7. The rise of DeFi and the Introduction of AMMs
The first implementation of decentralized finance (DeFi) was Bitcoin (BTC). However, it did not stop there. Ethereum’s programmability offered an opportunity to innovators to bring traditional finance features to the blockchain. Some of these are lending and borrowing on which the DeFi industry thrived in 2020. As it offered participants a trustless platform to engage in lending and borrowing, its popularity shot up quickly.
According to data compiled by DeFi Pulse, the total US dollar value locked in DeFi grew from $674 million in January 2019 to $20 Bn in January 2020.
The introduction of speculative AMMs (automatic market makers) marked a remarkable step in DeFi industry. The AMMs solve the critical pricing oracle problem of the decentralized finance ecosystem. That is why experts now believe AMMs are the future of DeFi.
2020 proved to be a phenomenal year for decentralized finance (DeFi). However, it did not receive much interest from institutional investors. Experts believe that in 2021, intuitional investors might try their hands at DeFi.
8. The dawn of Yield Farming
Yield farming took the crypto industry by storm in 2020. Eventually, it became a cornerstone concept for DeFi. It started with Compound in June 2020 and its popularity quickly accelerated. However, it did send ETH fees to record highs.
Cryptonews is that yield farming is expected to witness continued growth in 2021. The development of layer 2 scaling solutions will impact its growth as these solutions will take the burden off Ethereum blockchain.
9. Uniswap airdrop
In response to SushiSwap’s vampire mining attack, Uniswap airdropped UNI, its governance protocol token. Almost 150 million UNI was made available to be claimed by anyone who used Uniswap.
Within the first three hours of the announcement, almost13,000 Uniswap users claimed 400 free tokens. However, this mad rush slowed down the Ethereum network.
This year DEXs like Uniswap might be attacked by regulators. They will try to force KYC/CTF regulations on DEXs. Furthermore, the UNI price might be affected.
10. Popularity of WBTC.
In October 2020, almost 0.6% of all minted bitcoin had been wrapped in wBTC. According to Chen Fang, chief product office BitGo, this would reach 10% in next two years. Its popularity has soared because it turned bitcoin into one of the best collaterals in the world.
Experts believe that wrapped Bitcoin has played an important role in the current bitcoin price rally. Moreover, this might continue to happen in 2021.
Diving into 2021
In a pandemic impacted world, some cryptocurrencies enjoyed explosive price rallies. The heyday of cryptocurrencies may come and go but one thing is for sure – cryptocurrencies are no more a noise that will disappear overnight. Furthermore, they are here to stay and upend the traditional financial system.
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