Although there’s so much more to learn about Bitcoin’s development, cryptocurrencies like Bitcoin has become an international phenomenon in recent years. That said, many people are concerned and perhaps feel uncertain regarding this emerging technology and its potential to demolish traditional financial systems.
Without a doubt, 2020 has been a rollercoaster ride for anyone witnessing and investing in the Bitcoin market. In December 2020, the world’s most popular digital currency had traded over $23,000. When the rest of the world began suffering due to COVID-19’s havoc in March 2020, Bitcoin’s value was just below $4,000. For investors and traders, it was a period of gut-wrenching losses and gains. For spectators on the sidelines, it’s definitely an interesting market trend.
Despite Bitcoin’s significant price fluctuation, 2020 was also the year that accelerated and revolutionized digital currencies. With a COVID-19 era, people can’t help but ask regarding the future of Bitcoin and how things will unfold in the cryptocurrency world.
Rivalry from Central Banks
In 2020, the Bank for International Settlements has reported a survey describing approximately 80% of the central banks worldwide are implementing some form of virtual currency.
Undoubtedly, China is a frontrunner when it comes to innovations regarding digital currencies. In Suzhou, a recent lottery was facilitated wherein 100,000 residents have received 200 Chinese Yuan (renminbi) or $30 through their digital wallets. Hence, they were encouraged to sync their digital cash through their bank accounts. On the contrary, if they don’t use their digital money within a few days, it automatically disappears. Hence, an excellent technique to progress in the innovative efforts of China’s digital currency experimentations.
As China transitions toward nationwide implementation of the digital Chinese Yuan, it’s a possibility to destabilize the demand for independent cryptocurrencies, such as Bitcoin. In the foreseeable future, similar experimentations in other continents will surely take place.
More Normal Acceptance
Bitcoins’ application in daily life may be new to the public since very few people take the time to understand it, accept it, and eventually use it.
However, 2020 initiated an accelerated evolution in the adaptation of Bitcoin. Popular fintech companies, from PayPal’s buying and selling of Bitcoins among PayPal users to Square’s $50M investment in Bitcoin, have paved the way for Bitcoin’s acceptance for mainstream use.
In 2021, we’d probably witness more acceptance and adaptation of Bitcoin and other cryptocurrencies in the public. Hence, you can likely hear at least prominent European or U.S. banks to announce its implementation of blockchain technology for allowing Bitcoin purchases or agree to store digital assets for the majority of their clients.
Since Bitcoin’s value isn’t directly associated with any traditional assets or monetary policies, its upward trend or depreciation is more challenging to predict and analyze.
Speaking of investment ventures, Bitcoin isn’t the recommended option for investors aspiring to avoid big losses. Some analysts assumed that Bitcoin could hit an all-time high of $50,000 in 2021. Although it may seem extreme, it’s not questionable that some investors move their wealth from other assets or portfolios to Bitcoin.
Also, it’s a possibility that prices in 2021 will move in the opposite direction. However, one thing is certain that 2020’s wild ride is also anticipated. Hence, both investors and spectators can buckle up for an interesting trend.
Competition from Big Tech Companies
With COVID-19’s existence, the world has been forced to implement and use digital currencies and online transactions to replace cash on hand transactions for safety purposes. Hence, what Bitcoin has failed to accomplish or improve in its ten years of existence has been looked into and never neglected in recent years.
Every organization involved in the payment sector completely understands not only there is a platform for online payments but payments dealing with a diverse range of currency markets are highly favored. It’s primarily because such transactions take a few days to resolve and generally include a hefty amount of charges.
With Bitcoin, it has proved that an international digital currency can be remarkably streamlined when it comes to regulations, processes, and implementations. In 2020, both Google and Facebook have already started their shifts to bigger digital currency initiatives.
Although some tech offerings like Diem aren’t a replica of Bitcoin, they can catch up on Bitcoin’s growth if they implement drastic measures in 2021.
New Policies for the Cryptocurrency Field
For some analysts, a Joe Biden-led administration in the U.S. is essentially good for the cryptocurrency world. And of course, the U.S.’ congress is also another factor to consider when it comes to Bitcoin’s publicity in the foreseeable future. Despite these assumptions, some people have also concluded that a Democratic administration is more stringent than a Republican-led government when regulating cryptocurrencies.
On the contrary, Bitcoin experts may have overlooked issues, such as fraud and anonymity. For financial regulators, these issues are critical matters.
A clearer forecast regarding Bitcoin and other cryptocurrencies may include Biden’s team to create an effective and more comprehensive plan of regulating cryptocurrencies.
The future of Bitcoin may be full of questions and uncertainties; however, as cliché as it sounds, the beginning is always the most challenging part of every new venture. Cryptocurrency supporters view such potential as limitless while critics typically expect the worst. Like traditional assets, managing risks is the primary component. Potential and current investors who are pursuing cryptocurrency ventures must recognize what digital currencies are all about and should develop a comprehensive plan of action for all possible scenarios. Speaking of Exchange-Traded Products (ETP), Bitcoin Capital Active ETP is one example of an active ETP for helping investors manage the risk involved in cryptocurrency trading.