Alexander Larsen provided insight into cryptocurrency for the latest IRM Risk Predictions 2021 report. The article looks into the value of Bitcoin over the last year and the rise of other cryptocurrencies. You can see the full IRM Risk Predictions 2021 report via the following link:
Bitcoin boom 10x
2021 will be the time for Bitcoin to shine. For years the argument for Bitcoin has always been that it has been a store of value and protection against irresponsible monetary policy. Countermeasure against inflation. This pandemic has only further proven what Bitcoin supporters have been saying. That the money machine keeps on printing. It has piqued the interest of wealthy investors and major companies alike. Microstrategy has already invested the majority of their reserves out of USD into Bitcoin. To be clear… this now values at 1.6 billion USD!
2021 will see more companies follow this strategy. Once budgets are finalized, tax is paid, and investments are to be made, we can expect to see a huge jump in price over the coming year. It has already jumped from the 10,000 marks to the mid 30,000s, and many are predicting a price in the region of anywhere from 100,000 USD – 500,000 USD. This is coming from “reputable” institutions such as JP Morgan, Deutsche Bank and others, although it is also important to remember that these are the same institutions that were very clear in their statements that Bitcoin was a scam only three years ago.
Altcoin boom 100x
With the rise of Bitcoin, however will also be the rise of altcoins. The altcoins that still have life left in them, and this is where the major gains will be found. Most coins are still down 60-90% from all-time highs whilst some of the more established coins have reached their all-time highs again. As Bitcoin increases and slowly stabilises, much of the money will trickle down to these altcoins which will experience phenomenal growth of 1000% and more.
This will of course, lead to another crash/bubble burst with altcoins expected to crash as spectacularly as they rose. However, Bitcoin will unlikely see such radical falls.
The rise of Defi & Stable Coins
Unlike the previous altcoin boom of 2017, where Initial Coin Offerings (ICO’s) drove growth, this Altcoin cycle will be riding off wave of decentralized finance. If ICO’s were the theme of the 2017 cycle, Defi is the main theme for this one. Defi is an experimental form of finance which utilizes smart contracts on blockchains. Defi platforms allow people to lend or borrow funds from others, insure against risks, trade and speculate as well as earn interest in a savings-like account. It does away with the usual financial intermediaries such as brokerages, exchanges, or banks.
Last year we predicted the rise of Stable coins, and whilst it wasn’t necessarily visible, it seems that country governments globally have been taking notice and making preparations. An article by the International Monetary Fund highlighting this rise was published at the end of 2020 and can be found here: https://blogs.imf.org/2019/09/19/digital-currencies-the-rise-of-stablecoins/
As an example, regulators in the USA have accepted the use of stable coins by banks, whilst numerous banks and countries globally are working on their own stable coins.
2021 could see the introduction of an official country stable coin or country approved stable coin (such as Facebook’s Libra). At the very least, a white paper will be published.
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