Crypto Trends to Expect in 2021
It seems like everyone is talking about cryptocurrency these days. While it was fairly niche ten years ago, it is not uncommon to hear mainstream economists talking about various cryptocurrencies. People see the price of Bitcoin reaching new highs, and they want to know more. Once they know what cryptocurrency is, they wonder where they can use it and they start to get interested in crypto investing.
The increased interest in crypto is good in many ways, but the markets are complicated. It can be hard to predict where things are going, and people new to buying and trading cryptocurrency often make bad decisions. This lowers trust by the general public, and it isn’t good for anyone interested in developing a strong market for crypto coins.
While the crypto markets are notoriously difficult to predict, there are some trends that seem to be on the horizon. If you are looking to get into the market for crypto, the following are a few of the trends you should look out for.
A Potential Crisis
The world of cryptocurrency has come a long way in the last ten years. This is especially true when you look at the big players like Bitcoin and Ethereum. These coins are no longer seen as fringe tech products that facilitate illicit transactions. Now they are seen as legit stores of value that can be used to purchase a range of products and for investing.
Even with the impressive maturing of the market, we should still expect some growing pains. You can see the prices of coins skyrocket and then plummet as the result of something as simple as a tweet from certain influencers. It might be fascinating to watch, but it is not good for the market.
As a different, somewhat related problem, you have issues with crypto investing scams. One of the more notable issues is all the pump-and-dump schemes that you can find on the internet. This might not affect the more established coins, but it can be a serious problem for the smaller altcoins. Along with that, there have also been a few well-publicized issues with ICO exit scams. You can even use them to play poker at Bitcoin casinos.
5G Will Open High-Frequency Trading
5G is going to offer faster wireless internet to more people around the world. This is obviously going to create a lot of change, and the world of crypto will not be exempt.
Just as it is true with traditional stock markets, high-frequency trading can offer opportunities on crypto markets. With faster wireless internet, the potential for high-frequency trading will be available in more places.
At the current time, the big traders try to place their operations as close to the exchanges as possible to make their transactions faster. While there might still be some benefit to this strategy, 5G is going to close the gap between some of these traders and others who may not have the resources to be as close to the exchange.
Stronger Tax Enforcement
To some degree, crypto taxes have existed for some time in many places. It depends on where you are and how different regulatory agencies view crypto, but you probably should be paying taxes if you are turning a profit investing in cryptocurrency. With that said, enforcement hasn’t been particularly strong until recently.
With worries that crypto could be used for tax evasion, we should expect to see governments increase efforts toward regulation and enforcement. In the US, you already see the IRS requesting a funding increase that is specifically targeted at crypto markets. We might also see new regulations concerning reporting of transactions and treaties that involve the sharing of information between countries to bolster enforcement efforts.
Crypto Risk Assessment as an Industry
As was mentioned before, crypto markets can be difficult to anticipate. This is especially true when you look at some of the lesser-known coins. As more people join the market and the value of coins continue to grow, this is going to change.
Just as you have firms that specialize in assessing the risk of more traditional investment instruments, there will be a robust industry for crypto risk assessment. To some degree, this industry already exists. As large institutional investors take interest in cryptocurrency, there will be a need for serious risk assessment. Right now, most of the work is focused on the big-name coins, but that will change as more investors take an interest in smaller coins and ICOs.
These are just a few of the trends shaping the near future of crypto. It isn’t all rosy, but the markets and technology are still maturing. Overall, the future of crypto is bright. You just need to be prepared for the ups and downs that will come along the way.
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