Cryptocurrency investment predictions for 2021

 The institutionalization of cryptocurrency has become a new topic for 2020. Investment has mainly focused on bitcoin, which has been over 90% since the beginning of the year, as digital gold (i.e. an alternative to hard money fiat currencies), with wider investor acceptance. Institutional. Ethereum, the second-largest cryptocurrency, has undergone some speculative investment but is likely to be a high beta alternative to Bitcoin's main listing as an institutional investment asset class.



Pension, endowment and hedge funds were some of the institutional sectors that pioneered Bitcoin or increased risk more effectively. One of the most exciting new uses for institutional investment comes from corporations. The American company Microstrategy was one of the pioneers that added bitcoin as an asset to treasury management. Treasury management has been turned upside down as treasurers try to define a strategy for managing their liquid assets during a period of global negative rates and quantitative easing, and Bitcoin is gaining popularity as an alternative to fiat money markets or fixed-income investments.


Institutional investment strategies and allocations take time to incorporate new asset classes. However, I believe that we are now at a tipping point as Bitcoin distribution will become the mainstream in 2021 and Bitcoin will become the main distribution for any institutional wallet.


Cryptocurrency investment forecast for 2021

The adoption of cryptocurrencies in the financial sector is more advanced than the adoption in the corporate sector. In terms of hedge funds and asset managers, when periodicals with annualized returns are published at the end of the year and early adopters see significantly outperforming results, underperforming funds are likely to ask why they had nothing to do with Bitcoin. The effect could be similar in corporate markets: if those companies that announce significant treasury appropriations see their share price higher than others, then other companies are likely to follow.


It is possible that the same fear of getting lost, or FOMO, that we saw in 2017 led retail to cryptocurrency and the price of bitcoin could be replicated to a record high in 2021 as an institutional FOMO. The rapid acceleration of institutional funding in bitcoin will have a larger and deeper impact on the long-term valuation of bitcoins - the risk is equivalent to a change in bitcoin's price in 2021.


About retail investors in 2021

Institutional Investor Adoption creates the institutional infrastructure to support Bitcoin adoption. This, in turn, creates the foundation for retail and off-grade retail investment. PayPal's announcement of its entry into the cryptocurrency market provides opportunities for nearly 350 million users, which will no doubt encourage other organizations to follow suit. We can expect that retail will play an important role in cryptocurrencies as they are given easier and easier access to markets. Bitcoin's performance will drive narrative, and if the institutional market develops as we expect in 2021, rapid expansion on the slopes will only add fuel to the fire. 2021 promises to be an exciting year for the industry.