2020 saw the cryptoeconomy turn decidedly bullish again for the first time since the first days of 2018. What has changed since then? Well, almost everything.
In a macro sense, cryptocurrencies are now officially viewed as a hedge against mainstream assets among the growing number of mainstream consumers who are familiar with the financial technology. There is also the large participation of traditional mainstream organizations around crypto, as well as the fundamentals of projects like Ethereum that have been significantly improved.
When you combine all these factors, it is clear that the cryptoeconomy is heading into 2021 on an advantageous and bullish basis. That said, let’s dive into some of the specific developments that pave the way for this increasingly bullish crypto
Dow Jones S&P Indexes Launch Crypto Indices
S&P Dow Jones Indices, a partnership between CME Group, News Corp, and S&P Global, powers the most popular stock indices in the world – such as the S&P 500 and the Dow Jones Industrial Average (DJIA) – and is now going to crypto indexes.
Announced last week, DJI’s S&P brand indices will work through data from digital currency company Lukka to cover the performance of over 500 cryptocurrencies and tokens.
This distinctive dynamic will allow S&P customers to create their own crypto indices at will, which will significantly open global investor exposure to the new asset class. The floodgates to the mainstream open…
The “Valued and Industrial” Crypto Paradigm of the Rebellion
American billionaire investor Paul Tudor Jones (PTJ) has become a living legend in being talented in investments.
That’s why PTJ has been causing heads to turn with its recent support for crypto, as the investor took a significant position in bitcoin this fall.
Ever since, PTJ has been showing a greater savagery towards crypto as a whole. For example, this week PTJ interviewed Yahoo Finance, which cited the rise of “precious metal” cryptos such as bitcoin and “industrial metal” cryptos such as Ethereum. As the investor noted:
“If I had to guess what the future holds, it will be very similar to the metals complex. Where you had valuable crypto, that could be bitcoin, this is the first crypto, the first-mover, … then you have transactional cryptocurrencies, along with the sovereigns, and they may be more like industrial metals. So where you have gold as a precious metal, then you have copper, platinum … etc. So you may have valuable crypto, and industrial crypto. “
As such, if we see markets continue to rally around BTC and ETH as “valuable” and “industrial” crypto, then there are undoubtedly bullish days ahead in the near future.
(Note: go to the 7:11 minute marker in the video above to skip the cryptocurrency discussion).
BTC on the Balance Sheet
This year we saw large companies like MicroStrategy start buying BTC as part of their balance sheets.
It will be fascinating to see how the treasures of such companies perform over the coming years, but let’s make no mistake: the first dominos have already dropped in the BTC balance sheet adoption race with Microstrategy’s recent pivot to BTC .
MicroStrategy has purchased approximately 2,574 bitcoin for $ 50.0 million in cash in accordance with its Treasury Contingency Policy, at an average price of approximately $ 19,427 per bitcoin. We now have approximately 40,824 bitcoins.https: //t.co/nwZcM9zAXZ
– Michael Saylor (@michael_saylor) December 4, 2020
Accordingly, the company’s increased crypto participation signals that other companies will maintain similar balance sheet movements going forward. That will be great for crypto, to be sure.
Visa and PayPal are Arrived
One of the biggest narratives in the cryptoeconomy this year has been the increasing involvement of large companies. No companies provide a better example of this than PayPal and Visa.
For example, a few weeks ago, PayPal announced that it was opening support to buy and sell around major cryptocurrencies like BTC and ETH. That alone was huge news for crypto going forward, but then this week the stakes swell even higher when payments giant Visa revealed it was going to add USDC (fixed build on Ethereum) to its payment network of some 60 million merchants.
The grand takeaway? Large companies are embracing Ethereum directly now. Expect more to do the same in 2021!
To my mind, there have been three paradigm-changing developments in the cryptoeconomy to date: the launch of Bitcoin, the launch of Ethereum, and the launch of Ethereum 2.0.
The cool news for us is that we have to witness the activation of Eth2 on December 1st, 2020. Since then, we have begun to get a better sense of the gains that the ETH 2.0 crisis can bring. At the moment ~ 17% is average earnings we’re seeing.
Of course, the wildly decentralized finance (DeFi) sector has plenty of product farms that are more profitable than that right now. And yet, you have to take into account the fact that ~ 17% is far better than any mainstream return right now, and Ethereum has no shortage of active stakeholders who will participate ETH even if they could at DeFi at the time.
All of this to say that I think staking Eth2 will be very attractive in the near future, for a variety of different reasons. Many new entrants could plunge into the cryptoeconomy accordingly. Watch this niche!
DeFi Boost is Just Starting
DeFi is decentralized trading, savings, and derivatives in general. And much more. And the arena is swelling on a frenzied scale lately as newcomers are increasingly adopting space-based technology.
For example, the total locked value (TVL) in DeFI currently (ie the assets under management, or AUM, for traditional finance products) is currently $ 14.55 billion USD – less than $ 30 million shy of DeFi’s all-time high TVL of $ 14.8 billion reached this week!
This is a relatively small amount overall, and yet represents exponential growth for the DeFi space, which boasted TVL of less than $ 1 billion last year alone. Expect rapid growth to continue in the near future, considering how new and powerful DeFi is.
NFTs Will Help Crypto Go Into Mainstream
Non-fun tickets, or NFTs, have been the other big sector behind DeFi to top this year’s Ethereum.
Simply put, NFTs are media legos. This means they can be involved in almost anything, including gaming assets, virtual land, cryptoart, and beyond.
Of course, the NFT economy is still relatively small compared to DeFi as it is, but the NFT ecosystem grew exponentially this year alongside DeFi. These developments suggest that “silver legos” and “media legos” are here to stay. Look for NFTs to continue to thrive and be the driving force behind the growing popularity of crypto next year.
At the end of the day, the cryptoeconomy is inscrutable.
Things can seem bearish, or they can seem bullish. The best thing you can do accordingly is to investigate the basic issues as best you can. But if you dig in, you may come to similar conclusions that this post has: DeFi, NFTs, and social tokens cannot be ignored at this point.
If you’re doing that now, then you’re completely oblivious to the way things are going in the years ahead. Why? Because the future will be dominated by crypto, at least in a financial sense.