The significant increase in the prices of cryptocurrencies in 2020 has attracted investors across the globe into the cryptocurrency world. This is especially true for Bitcoin, which has risen exponentially to unprecedented heights over the past year. Due to the popularity of crypto trading in recent times, new trends in cryptocurrencies are now becoming eminent that could impact the crypto ecosystem. In this article, we’ll share the top trends in the crypto space that are happening right now.
1. Institutional adaptation of cryptocurrencies
As the name implies, an institutional adaptation of cryptocurrencies involves financial institutions and large organizations allocating capital into cryptocurrencies. This concept was initially viewed with skepticism by financial institutions at the inception of cryptocurrencies but today, many institutions are investing heavily into crypto to reap a huge return on investments (ROI). This trend significantly started in August 2020, when a leading business intelligence company, Microstrategy invested heavily in Bitcoin which pushed the price to over $50,000. The estimate of the investment was a total of $250 and this heavy influx of cash resulted in the popular price surge in 2020. This trend is still dominant in 2021 as big financial firms are still investing in popular digital currencies such as Bitcoin, Ethereum, and Dogecoin.
2. Rise of NFTs
The concept of Non-fungible tokens (NFTs) is gaining recognition in the crypto space. It is a digital certificate of authenticity. They represent digital claims to an asset or object. Such objects could be classic works of art, antiques, or other historical objects that can be bought and sold. Also known as crypto-collectibles, they are cryptographic tokens that cannot be traded on the
Blockchain network. They cannot be exchanged for another, that is why they are non-fungible. NFTs are gaining more mainstream attention in 2021 than in any other year. Some exchange platforms such as Binance are looking to integrate NFT marketplaces into their platform because of the high demand for NFTs in the cryptocurrency world.
3. Defi
Another area drawing attention in the crypto space this year is the introduction of Defi (Decentralized Finance) applications. This concept involves carrying out traditional transactions on the Blockchain. The advantage Defi brings over the traditional methods is decentralization, transparency, and anonymity. It is enabled by smart contract operations and decentralized applications (DApps). This year has brought unprecedented growth in DeFi, attracting developers to develop decentralized applications on the Blockchain. One of the most popular and recent DeFi applications this year has been Yield farming. This trend is heavily supported by the popular Blockchain platform, Ethereum.
4. Central Bank Digital Currencies (CBDC)
For the past few years, the traditional banking sector around the globe has made every effort to control the rapid growth of popular digital currencies like Bitcoin and Ethereum. These blockchain networks have become a threat to the traditional banking system which operates under the control of the Central bank -the centralized financial institution of a country. Owning to the independent and decentralized nature of these virtual currencies, Central banks have been exploring ways to create a digital version of cash: money that is trusted, convenient to use, and widely available to people, for making payments and getting paid. A cryptocurrency called Central Bank Digital Currencies (CBDC). Some countries have started to adopt this trend and see it as a way to leverage the irregularities in non-regulated cryptocurrencies.
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