Several potential developments are projected to take place in 2021 that could significantly impact the crypto market at large. Surely, cryptocurrency is here to stay. As such, here are five of the 2021 crypto trends that we expect to shake the world.
Technological Advancement in the Crypto Industry Through 5G
The world has introduced innovations such as the 5th generation network (5G). Therefore, there will be an introduction of diverse concepts and services in the crypto industry. With networks such as Pi already introducing mining through smartphones, there is a lot that will transform using 5G technology.
Also, the 5G technology fuels data transmission, data speed, order withdrawals, and many more. 5G is moving towards global acceptance and is certain to also transform the crypto industry.
Crypto Tax and Regulations
To begin with, the legal and policy surrounding the crypto landscape around the world differ. But over the past years, cryptocurrencies have become ubiquitous. This has prompted more national and regional authorities to grapple with their regulation. Of late, many people are becoming more engaged in discussing crypto taxation.
Though crypto tax is still at the introductory level, some countries already require tax for virtual currencies. The Internal Revenue Services (IRS) considers virtual currency to be property — the same way it treats stocks or other investments. Hence, you need to file crypto gains when you file your income tax returns.
Already, governments are placing strict regulations on exchanges through Know-Your-Customer (KYC) verifications. With this, we can expect tax regulations to appear in various jurisdictions soon. In fact, India is planning to impose 18% Bitcoin tax for transactions within its jurisdiction.
Change in Crypto Transaction Costs
At the time of writing, Ethereum average transaction costs nearly doubled as the 24-hour trading volume topped $50B. The average value now stands at $17,43 per transaction from $10.20. The current transaction fee constitutes an all-time high (ATH) in average Ethereum fees.
Additionally, the cost of doing transactions on Bitcoin is surging. Meanwhile, the network is facing high congestion amid the price rally. The spike in transaction fees may continue as a result of new technology and services. In the e-commerce industry, a change in transaction fees may have a negative impact.
Most businesses have turned to crypto as a way to avoid high fee charges experienced when using fiat currencies. Hence, an increase in transaction fees for the crypto industry is a disadvantage for crypto mainstream users.
Institutional Investors Now in Crypto
In a most unexpected turn of events, many institutional investors are now in crypto. In fact, we can credit the lion’s share of crypto investments from these firms and high-profile people. For example, PayPal has enabled Bitcoin on its platform. With this, many people now have access to Bitcoin.
However, Bitcoin has a finite supply. Consequently, PayPal is buying a bulk of newly-minted BTCs to provide supply to its buyers. Also, renowned investment managers Square and MicroStrategy are blatant in their support for Bitcoin.
Another big player to join the Bitcoin bandwagon is JP Morgan. In fact, JP Morgan expects Bitcoin to reach $146K.
On the other hand, the risk management landscape is taking a more recognizable form in the crypto industry.
Currently, there are over 8,000 cryptocurrencies across the globe. Of course, the crypto world now has less uncertainty and there are more opportunities today. However, many people now see an increasing need for risk assessment models.
There is no doubt the crypto industry has the ability to live up to its enormous hype. Nonetheless, it will only do so if individuals and organizations invest responsibly into crypto. Furthermore, they need to have a good understanding of the key risks and mitigation plans.
Crypto Crises and Lawsuits
Completing our list of top 2021 crypto trends is the increasing amount of crypto lawsuits and crisis. Of course, this is inevitable, since crypto is also prone to some economic challenges.
For example, a Bloomberg report in 2019 claimed that Tether’s USDT was not completely pegged to the dollar. Rather, the circulating supply is only backed by 74% in cash and short-term securities. In order to increase the capitalisation of its coins, Tether, is constantly increasing their emission.
Diverse lawsuits continue to appear in the crypto industry. Tether is owned by the company iFinex, against which investors filed a class action lawsuit for $1.4 trillion on charges of market manipulation in 2017-2018. Apparently, Ripple is also facing a lawsuit filed by the US Securities and Exchanges Commission (SEC).
Having said all this, the interest to adopt cryptocurrency for various use cases is growing globally. Moreover, there is an uptick in the number of companies investing in cryptocurrencies. Crypto is becoming more understandable and more mainstream. 2021 awaits with new trends that will either assist or drawback the crypto industry.
Summary of 2021 Crypto Trends
Many cryptocurrencies began 2021 with strong momentum. With these, we can expect more 2021 crypto trends as blockchain and crypto become the talk of the town.
In summary, first on our list of the top 2021 crypto trends is 5G and its waltz into the crypto industry. Secondly, we have more dedicated talks on crypto tax and regulations. Thirdly, we may see more abrupt changes in transaction costs. Fourthly, more institutional investors will flock to crypto. Finally, we can expect to witness more crypto lawsuits and crises.