In 2020, we have witnessed the rise of decentralised finance, liquidity mining and governance tokens. And in 2021, the situation remained almost the same, constant hike for the price of cryptocurrency and the increasingly adoption of it while the pandemic continue to ravage the economy.
It is undeniable that the pandemic has seriously accelerated everything into digital. From ordering food to even buying art, people are getting more comfortable to do it from their smartphone or laptop. So from now, where do you think cryptocurrency will be, let’s say in the next 5 years?
We have come out with 3 aspects that is worth noting and pay attention to in regard of how the future of crypto plays out.
Regulation
As cryptocurrency continue to make its way into financial market, policy makers and central bank authorities are busy developing regulations to ensure the safety, reliability and control the energy use of the digital currency. Even though the currency itself is boundary-less, news of regulatory actions still has a strong effect on the cryptocurrency market. Regulation talks are heating up, and trust us, the more power cryptocurrency has grown on the market, the more scrutiny it will get from regulators. Fiat is feeling the pressure and now the big names are interested.
Cryptocurrency Exchange-Traded-Fund Approval
Yes, you heard it right, investment firms like Fidelity and Vanguard are working hard to get approval from the U.S. Securities and Exchange Commission on the cryptocurrency ETF. These funds could help investors to diversify their holdings across different coins and is accessible using your traditional investment accounts. Opening its door to investors who are not as tech-savvy as millennials but still want to get a feel on it. Though obtaining the approval is highly possible, the wild price swings of Bitcoin in the first few months of 2021 have reignited worries about exposing ETF investors to such volatility.
Please keep in mind that owning cryptocurrency the traditional way (through investing in an crypto ETF) is not as safe as investing in the stock market. These funds are still just as speculative as any crypto investment and is subject to high volatility.
Broader Institutional Cryptocurrency Adoption
Just last week, payment giant PayPal caused ripple by announcing that it would allow their customers in UK to buy and sell crytocurrencies. Plus a handful of large companies, such as Microsoft and Tesla have begun accepting Bitcoin as payment. These are major step forward towards the mass adoption of the digital currencies. Big companies are now the bellwether that give confidence to more and more businesses on crypto adoption and this is all because they are sure that digital currencies will play a vital role in consumer payments over the longer term.
With that being said, the boom of the overall cyrpto market has created an unprecedented financial revolution. Though their are still hurdles to overcome before crypto can truly break into the mainstream, things are looking pretty good and exciting. With a technology offers enough benefits like anonymity and low transaction fees, the growth and adoption of cryptocurrency market are inevitable.
