Thu. Jan 21st, 2021

Bitcoin is coming to the end of one of the biggest years in its short history.The bitcoin price has surged through 2020, reclaiming its 2017 all-time highs after finding support from Wall Street and some of the world’s biggest investors.Now, with the bitcoin and cryptocurrency community looking forward to a slew of developments in 2021—including the much-anticipated launch of Facebook’s bitcoin-inspired cryptocurrency and potentially industry-defining U.S. cryptocurrency regulations—Wall Street giant Wells Fargo WFC -1.4% has said it expects to be “discussing the digital asset space more” next year.

Over the past 12 years, [bitcoin and cryptocurrencies] have risen from literally nothing to $560 billion in market capitalization,” John LaForge, head of real asset strategy at Wells Fargo, wrote in an investment strategy report this week.Fads don’t typically last 12 years. There are good reasons for this—reasons that every investor should hear. As we roll into 2021, we’ll be discussing the digital asset space more—its upside and downside.”LaForge pointed to bitcoin’s 170% gain this year—”that’s on top of the 90% gain it had in 2019″—naming cryptocurrency investing as “a bit like living in the early days of the 1850’s gold rush, which involved more speculating than investing.”

As well as speculative interest from traditional investors, bitcoin and cryptocurrencies have seen a surge in take-up from the likes of payments giants PayPal and Square this year—something that’s expected to have an impact in 2021.2021 really centers around continual improvements in continuity between traditional markets and crypto markets,” Pierce Crosby, general manager at financial data company TradingView, said via email.

“A perfect example would be Square’s SQ -0.3% bitcoin offering or PayPal’s PYPL -0.6% payment via crypto. There are many such use cases for crypto, and we expect these to expand rapidly in the coming year. Trading will still be reflective of this adoption curve; the higher the adoption, the more bullish the overall trading mix will be, which is a bullish base case for the major crypto assets.”

Bitcoin’s volatility took “center stage” this year according to Crosby, with the bitcoin price falling to lows of around $4,000 per bitcoin during the March coronavirus crash before sharply rebounding, but added it’s “almost impossible to pass over the ‘Summer of DeFi,’ which echoed the initial coin offering (ICO) boom back in 2017.”

Ethereum, the world’s second-largest cryptocurrency by value after bitcoin, has soared by 300% over the last 12 months amid a flurry of interest in decentralized finance (DeFi)—using crypto technology to recreate traditional financial instruments such as loans and insurance with many DeFi projects built on top of the ethereum network.From the trading perspective, most of the year’s focus has been on yield and structured products, we’ve seen a huge wave of futures products and options products come to market, and it’s likely more will follow soon.

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