Complex Made Simple

These are the trends shaping cryptocurrencies in 2020

While fiat money has its depreciation issues, a bundle of dollars or Euros in a suitcase will evoke a “Wow” from us every single time. Paper money and centralized finance (CeFi) have been with us since the bygone days of barter ended and we are naturally reluctant to let go of it, though digital banking has its place in global economies.

And now paper money is on its way out too, as cryptos make an increasing impact and statement on finance, making it decentralized (DeFi).  

The trends to expect from cryptocurrencies are below: 

Top 7 trends for Cryptos in 2020

1. Paperless

COVID-19 has made practices like remote jobs or crypto payments gain more prominence, and digitized our economy in such a way as to make cash more and more redundant.  

In parallel, the blockchain field has also blossomed, and a new era of distributed ledger technology has arisen, the true abode of cryptos. Stablecoin wallets are in high demand, and this evident trend is no more a millennial-only kind of thing as institutions join the club in substantial numbers.

2. Cryptos are our newest bedfellows 

Who hasn’t heard of Bitcoin (BTC) and Ether (ETH) and has not yet been fascinated by the erratic volatility of these cryptos and the billionaires (and bankrupted) it made. It’s the stuff dreams (or nightmares) are made of.  BTC’s market capitalization is now bigger than Coca-Cola and Intel, and blockchain is integrated into many fields and operations. Moreover, institutional crypto involvement is rising as the demand for Bitcoin soars amid the coronavirus crisis, with Grayscale experiencing a drastic increase in assets this year. More hedge funds are accumulating digital wealth fast, sure to continue this year.

3. DeFi adoption 

DeFi, has become one of the most prominent trends in crypto since late 2019. The sector has been growing at a fast pace over the past six months, and a new milestone was recently reached by the sector as the total value locked in DeFi hit an astonishing new height of $4 billion.

Many companies that operate in the blockchain field have already introduced their DeFi products. Popular protocols such as Compound, Balancer, Curve, and other platforms have opened the door to a whole new world of crypto opportunities for investors looking for deep liquidity and varying risk-reward ratios. 

4. Central bank digital currencies (CBDCs

CBDCs are stablecoin cryptocurrencies that banks are devising to join the transformation happening from Cefi to DeFi. Countries such as China is creating the digital asset e-yuan and challenging the dollar’s status as a global reserve currency. The competition may be fierce in this field.

Private companies are continuing stablecoin developments as well with projects such as USD Coin (USDC), Paxos Standard (PAX), and Libra, Facebook’s much-awaited peer-to-peer digital banking solution. 

5. Cryptocurrency trading

2020 will likely be a significant year for Bakkt that increases cryptocurrency trading in general. Bakkt will reportedly launch a crypto consumer app in the first half of 2020.

 Bakkt is a product of the same company that spawned the vaunted New York Stock Exchange, and it plans to enter the market with the support of big names including BCG, Microsoft, and Starbucks.

6. New Cryptos

In 2009, there was one cryptocurrency, bitcoin, and in 2020, there are over 5,000 cryptocurrencies in existence. Companies, governments, and entrepreneurs are all trying to get into this trend and create their own cryptocurrency that can take the world by storm like bitcoin.  

Banks like J.P. Morgan have even started to pursue cryptocurrency over blockchain technology.

In June 2020, Compound released a new cryptocurrency and in the first week, it rocketed to a $2 billion valuation. Even smaller new currencies have found love from investors, though. Not everyone can buy bitcoin at its 5-figure price tag so new cryptos that start small with the potential to grow are exciting too.

7. Day trading of cryptocurrencies

While the majority are flocking to the stock market, many are gravitating to the cryptocurrency market. According to Cove Markets, cryptocurrencies are particularly attractive to day traders for a variety of reasons. Traders have access to markets 24/7, different types of cryptocurrencies to trade, and different ways to trade them.

The biggest reason cryptocurrencies lend themselves to day trading so well is the volatility of cryptos as day traders crave opportunities for enormous profits (but not big losses) in a very short amount of time.