8 Unknown Cryptocurrency Predictions for 2021

Cryptocurrency adoption reached new heights in 2020, and the trend is expected to continue in 2021. Due to increased demand from institutional investors, Bitcoin hit a new high of $41,000 at the start of the year.

1. Professional traders are more likely to participate.

With the participation of traders who deal in high-volume Cryptocurrency purchases and sales, there will be a significant increase in trading volume and liquidity. This will give the company more credibility and increase investor confidence. 

One of the main reasons for Bitcoin's massive price rise has been its halving, which reduced supply. Cryptocurrencies will attract institutional money from pension funds, mutual funds, hedge funds, and corporate investments.

Investors are attracted to stable coins because of their low volatility and ability to be used for portfolio diversification. In 2020, the number of Stable coins in circulation increased by 500%. It can be backed by fiat currency, cryptocurrency, and commodities. Stable coins have a market cap of $34.65 billion and a massive trading volume of $144.43 billion.

Due to the extreme fluctuations in the cryptocurrency market, demand for stable coins such as USDT, USDC, DAI, BUSD, and TUSD has skyrocketed. It can be used as a store of value, a unit of account, and it has enough liquidity, low risks, and is widely accepted in the market. 

It can also be traded 24 hours a day, seven days a week. Diem, Facebook's stable coin, is set to launch later this year and compete with PayPal, Master-card, and Visa. Diem can be easily exchanged for Bitcoins and other cryptocurrencies.

Authorities are expected to pass progressive guidelines for digital currency recognition. It will become more efficient and well-organized. Cryptocurrency exchanges can become legal businesses by paying taxes, which will bring in a lot of money for the government. 

The Internal Revenue Service (IRS) of the United States has asked taxpayers to report all virtual currency transactions. Exchanges will be required to share data in a consistent and timely manner. With the Indian government set to release its Union Budget on February 1, speculation is rife that cryptocurrency will be classified as an intangible asset and taxed as such. 

According to the Central Economic Intelligence Bureau's recommendations, a 20% tax on long-term capital gains and a 15% tax on short-term capital gains may be imposed, and an 18% GST may be imposed on Bitcoin transactions.

Entrepreneurs are setting up their own Cryptocurrency ventures with active financial support from venture capitalists to make it big in this fast-growing industry. As a result, the market will be more competitive. 

Newer features, trading facilities in a variety of assets, and advanced security measures will benefit users. There are currently 294 different Cryptocurrency exchanges on the market, with that number expected to rise this year.

Some major corporations, such as PayPal, Walmart, Amazon, and JP Morgan, have already adopted Cryptocurrencies into their day-to-day operations. Users can use various digital currencies to transfer funds, make peer-to-peer payments, and buy various products. 

It can also be used as a hedging tool against inflation and a stock market downturn. Cryptocurrencies are seen as a viable investment option ahead of traditional real-world assets such as gold and real estate.

Central banks are planning to create their digital currencies for widespread use to promote greater trust and faith in authorities.

This will make it harder for illegal activities like drug trafficking, money laundering, and terrorism financing to use Cryptos. It will also lead to greater digitization of the traditional financial system. 

China, for example, has launched a digital version of its Yuan fiat currency, which is being tested in cities such as Shanghai, Beijing, and Shenzhen. 

The digital Yuan will compete with established payment companies such as Alipay and WeChat Pay in the Chinese market. More than 40 countries are digitizing their fiat currencies in various stages.

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