There is never a more appropriate time to do some fortune-telling in the Cryptoverse than the year-end holiday season. As this more than eventful 2020 is coming to an end, many are curious what the next year has in store for us. And though we can’t know for sure, industry insiders can certainly make some educated guesses based on what happened so far.
As last year, the team at cryptocurrency venture fund Token Daily Capital asked some builders and investors in the space about what they think is in for crypto in 2021. So once again, let’s see if there is a pattern to all the forecasts? What sort of issues keep cropping up? And are there any real surprises lurking in these super cyber-soothsaying sessions?
Everyone’s talking about…
Bitcoin breaking the walls: Pantera Capital‘s Joey Krug sees USD 100,000 per bitcoin (BTC) next year, as well as USD 2,000 per ethereum (ETH). CoinShares‘ Meltem Demirors also sees BTC going that high, saying the coin will become “globally championed as the antidote to dysfunction,” with Matt Huang from Paradigm adding that “Bitcoin becomes consensus.” Furthermore, Lolli‘s Alex Adelman thinks several publicly traded companies, including Tesla, will add BTC to their balance sheet, and Three Arrows Capital‘s Shu Zhu said several central banks will announce “substantial” stakes in BTC, while several large public companies will issue BTC-related capital structure instruments.
Lightning network / layer 2 solutions: Many participants see Lightning Network and layer 2 solutions (these are built on top of the base protocol) increasing adoption. Casa‘s Stacie Waleyko said that “any kind of bull run is going to force activity onto layer two for wins in scalability and lower fees,” while those that have integrated Lightning “are going to reap big rewards.” And while Casey Caruso from Bessemer Venture Partners thinks “Many layer 1s will die,” Alexander Angel from Primitive says “there will be a layer 1 protocol with a fully diluted market cap of [USD] 100B.”
Unavoidable regulation: Colleen Sullivan from CMT Digital says 2021 will be the year of the regulator, Matthew Walsh from Castle Island Ventures thinks clarity from the US Securities and Exchange Commission (SEC) will unlock even greater levels of institutional participation, and DCG‘s Larry Sukernik thinks we’ll see more projects self-reporting financials. Meanwhile Square Crypto‘s Matt Corallo says Western countries will “continue their multi-lateral regulatory attacks on free movement of crypto, especially as it relates to coins moving into or out of exchanges.” Also, while Kinjal Shah from Blockchain Capital says we’ll see another announcement of a fiat-backed stablecoin from a tech player after Libra/Diem’s launch, Imran Khan from Volt Capital sees two worlds emerging in DeFi: the semi-regulated and slow-to-adopt “US first world” and the untethered “Asia first world.”
DeFi: Valiu‘s Simon Chamorro says that next year (like most) will be the year of decentralized finance (DeFi), while Nansen‘s Alexander Svanevik added that DeFi will meet fintech soon. Qiao Wang from DeFi Alliance thinks that as central bank digital currencies (CBDCs) and stablecoins “around the world begin to flourish, foreign exchange will be the most under-discussed yet the most contested battleground in DeFi.” Su Zhu says DeFi total value locked will “pierce through” USD 100bn, while Slingshot‘s Clinton Bembry Jr. says DEX (decentralized exchange) trading volume in 2021 will break USD 1tn.
Keep an eye on…
Exchange-traded funds (ETFs): Castle Island Ventures’s Matthew Walsh said that a US pension fund will publicly announce a bitcoin position, and more than one Bitcoin ETF will be approved, with Joshua Rivera from Blockchain Capital adding that the premiums to retail purchasers of traded digital asset fund products like Grayscale’s GBTC and Bitwise’s BITW “will become so exorbitant that the SEC will finally recognize the incongruence to retail investors and approve a Bitcoin ETF.”
Mining: Meltem Demirors sees North American mining and mining with renewables dominate the narrative.
Wallets: Stacie Waleyko says 2021 is going to be “a year of development that will bring a new set of features to hardware wallets/signing devices and expand the way we think about them.”
Gen Z entering crypto force: As the COVID-19 pandemic “re-engineered our minds to adapt to digitization” as Magic‘s Jaemin Jin said, Stacie Waleyko estimates that price movements in 2021 will drive a wave of highly accessible, beginner-friendly educational material, which could be followed by more adoption from Gen Z.
Tokenization galore: Digital art and online creator economies will explode and “tokenization is going to turn creative economics upside down,” said Meltem Demirors. Qiao Wang says that we’ll experience an “NFT summer” similar to the 2020 DeFi summer, while Jason Lau looks forward to “at least one crypto-integrated game (and subsequent NFTs) becoming mainstream.” Scalar Capital‘s Linda Xie added that there’ll be significant experimentation in the personal/social token space, while Interchain‘s Tess Rinearson sees tokens targeted towards very specific and small communities – “community tokens” or “social tokens” – bridging crypto and the rest of the real world.
And the independent ones
Meltem Demirors stated that there may be at least 5 pure-play crypto initial public offering (IPOs), topping USD 250bn in market value next year. Matthew Walsh added that several cryptoasset infrastructure companies will go public via traditional IPOs and SPACs. Meanwhile, Su Zhu thinks the Coinbase IPO will trigger a frenzy of M&A. Speaking of which, others too believe M&A will start heating up. OKCoin‘s Jason Lau wrote: “expect to see M&A deals as traditional players acquire the talent and infrastructure required to participate.”
Avichal Garg from Electric Capital said that the disruptive and transformative developments from 2021 won’t be seen until 2024, these being: Layer 1 protocols having emerging developer ecosystems, DeFi touching tens of billions of dollars, decentralized infrastructure having an early product-market fit, artists making significant income via NFTs, and DAOs (decentralized autonomous organizations) managing billions of dollars.
Tomiwa Lasebikan from BuyCoins thinks there will be “at least a momentary market cap flippening between a smart contract-focused blockchain and Ethereum,” adding that “Ethereum will suffer some punishment for its slow development over the years as its blockchain gets even more congested.”
Nic Carter from Castle Island Ventures says that in 2021, “an episode of crypto-dollarization is acknowledged as playing a significant role in the collapse of a sovereign currency (which is not the Venezuelan Bolivar).”
Meanwhile, Web3 Foundation‘s Ashley Tyson joked: “In an unprecedented acquisition, Ripple will acquire the languishing Fed, and will transition to offloading their stash of XRP for [COVID-19] stimulus checks as it is the one, true American cryptocurrency as preferred by banks.” Well, this acquisition is now seemingly postponed due to a recent crackdown on Ripple.
Lastly, a poem by Bitcoin Core Developer Amiti Uttarwar, based on true events:
“The bitcoin price:
will go down
will go up