The king of all cryptocurrencies is, of course, Bitcoin and its dynamics will influence the entire market. Many developments, both cryptocurrency-specific and mainstream, appeared as catalysts for Bitcoin price action. One of the reasons for this huge growth in recent months is the support of institutional investors who are willing to hedge against the fluctuation of traditional asset classes. The total value of cryptocurrency assets managed by different financial companies has increased considerably during 2020. Companies such as Square, MassMutual and MicroStrategy have used their balance sheets, while PayPal has started accepting cryptocurrencies on its platforms and Elon Musk has announced that Tesla has purchased $1.5 billion in Bitcoin and will begin accepting payments in the cryptocurrency. Like gold, which retains its value but can be volatile over shorter periods, Bitcoin plays a role as a security blanket for investors who are anxious about the state of the world. With continued lockdowns around the world, global recession, trillions of dollars printed by central banks, and rising inflation, Bitcoin is seen as a very successful inflationary operation.
The next big play for bitcoin is sovereign wealth funds and governments. Will they be prepared to make a public investment in bitcoin next year? Norway's sovereign wealth fund, for example, already holds Bitcoin through participation in MicroStrategy. DeFi – Decentralized financial services Decentralized financial services ( DeFi ) could be one
Phone Number List of the biggest trends in the Crypto space in 2021. Lending, borrowing, structuring derivative products, and buying and selling securities over a decentralized open source network could revolutionize the entire financial system. Most DeFi contracts incorporate stablecoins. Examples of DeFi usage include decentralized exchanges that act as peer-to-peer exchanges (Curve, Uniswap, Bancor, Kyber, and Synthetix are some of them), lending contracts where interest rates are calculated algorithmically based on supply, and demand (Compound, Aave, Maker are some of the most well-known lending platforms), asset management protocols to automate robo-advice (Yearn.
Finance, Melon, Set protocol, Zapper.fi and Insta.dapp) and many other solutions in the field of finance and insurance. Hedging your bets As already mentioned, stablecoins are useful vehicles for DeFi. They are used as a hedge against market volatility. There are different versions of stablecoins, from fiat collateral to cryptographic collateral. Fiat-collateralized stablecoins maintain a reserve of fiat currency, such as the US dollar, as collateral to issue an adequate number of cryptocurrencies. The most well-known examples are Tether (USDT), USD Coin (USDC), Binance USD (BUSD) and TrueUSD (TUSD), which are pegged to the US dollar at a 1:1 ratio. For other national currencies, there are also stablecoins on the market such as the Singapore dollar-denominated token (XSGD Stablecoin) and the EURS stablecoin. Cryptocollateralized stablecoins are backed by other cryptocurrencies. The example of this type is Maker's Dai stablecoin, which is sent to users in exchange for sending the underlying collateral, Ether, to collateralized debt positions.