Cryptocurrency market trends to look out for in 2021
The finance industry has been undergone a drastic transformation over the past decade with an introduction of cryptocurrency. Though 2020 has been an incredible year for cryptocurrency with digital transformation taking place due to Covid-19 pandemic, 2021 has been the year of breakthroughs, achievements, and uncertainties. The start of the new decade holds new promises, activities, and expectations. With growing knowledge about different exchange platforms and emergence of new cryptocurrencies, this year will see a lot of changes in terms of assessments, regulations, technologies, and cost.
New developments will be come to light with each passing day as innovations in terms of technology and finance have been taking at the rapid pace. Over the next five years, cryptocurrency is expected to become a sensation in the finance world. According to the report published by Allied Market Research, the?global cryptocurrency market?is expected to register a considerable growth by 2026. Though it is uncertain what the future holds, the current trends can be helpful to predict how the market will take share. Following are some of the trends to look out for in 2021:
Tax regulations
The adoption of cryptocurrency has been growing across the world and industry is getting bigger and bigger each day. The taxation on transactions have not been charged yet as there is no involvement or monitoring by governments. However, this trend is supposed to change as there is a large scope to evade taxes on revenue generated by individuals. Tax frameworks have been emerging in various countries and policymakers will ensure no individual slips their money from governments. New protocols will come in effect and new rules will be applied. There will be a time you will see a case of bitcoin tax evasion.
Improved assessment models
In April 2021, the Bitcoin price reached nearly $64,000. However, it dropped by nearly half of that in July 2021. This is not the case with each cryptocurrency. But those who invested in bitcoin have been going through emotional turmoil with uncertainty and lack of stability in prices. Though this has always been the case with cryptocurrencies, novel technologies have led to development of risk assessment models. These models will help investors in buying, selling, and mining their cryptocurrencies. This year, newly improved models are expected to emerge to help investors and buyers in making smart decisions in trading different types of cryptocurrencies. Novices and experienced in the virtual currency market would be benefited by referring to these models.
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Transaction cost changes
Transaction costs are different for each type of cryptocurrency. This trend would shape the finance market as online businesses that allow usage of cryptocurrency as a method of payment would take the cost of transaction associated with each type into consideration. As of now, the transaction costs continue to plummet for Ether, while Bitcoin transactions are getting costlier than before. The interest in various cryptocurrencies will also influence the costs of transactions. Though the costs are lesser than fiat counterparts for now, it will be interesting to see how the costs will be incurred in the long-term.
5G in mainstream
The emergence of 5G will play an important role in making decisions on mining operations, DeFi application, and offering new services in the cryptocurrency market. Many network issues will be solved and traders can carry out transactions at faster rate than before. Moreover, the ubiquitous nature of 5G connectivity across the world would eliminate the need to locate servers near the crypto exchanges. This will create a fair playing field for traders and investors and remove unfair advantage to players who had an ability to carry out higher-speed transactions due to location of server near their exchanges.
Rise in interest of millennial
Despite the volatility of the market, there has been a significant increase in cryptocurrencies among millennial population. Availability of guidance and a huge scope for expansion led the millennial to invest their money and exploit the opportunities presented by the ever-increasing and growing market of cryptocurrency. With emergence of enhanced risk assessment models and advanced technologies that help them in investing strategically, millennial population is interested in investing their stakes in different types of virtual currency.
Though many financial experts, serial entrepreneurs, and influential people have been turning their backs toward cryptocurrency and calling it a bubble, there is no doubt that it brought disruption in the finance industry. There are big signs of cryptocurrency market growth in the next few years as innovative technologies and improved assessment models emerge to help eager millennial, experienced traders, and investors put their stakes strategically. As there is nothing guaranteed in this highly volatile market, this uncertainty is a major factor why people are more attracted toward this market. It will be interesting to see how this market takes shape in the next few years.