2020 was an unprecedented year for the world and for crypto. Let's look back at some of the major events to happen in our industry:
Quick Takeaways
- Bitcoin's Big Year: 2020 was a rollercoaster year for Bitcoin. We experienced halving, extreme lows on Black Thursday, then a parabolic recovery leading us to new all-time highs.
- DeFi Summer: This year was an insane frenzy of action for DeFi. By the end of 2020, total value locked in DeFi grew more than 23-fold from under $700M to $15B.
- The Dawn of Yield Farming: Among DeFi’s most revolutionary ideas was the idea of yield farming, which distributed the ownership of protocols to early supporters.
- Beginnings of Crypto Mass Adoption: With Paypal allowing its 300M users to purchase crypto directly, we have seen a tremendous inflow of PayPal funds into crypto, especially Bitcoin.
- Institutional Bitcoin Adoption: Besides Microstrategy and Paypal, Institutions one by one announced their support of crypto, notably financial heavyweights like Goldman Sachs, Fidelity, and Citibank, to name a few.
- Ethereum 2.0: The upgrade to Ethereum 2.0 has been long-awaited by the ETH community. If anything, summer’s DeFi madness has shown that Ethereum is in dire need of an upgrade in scalability.
- Explosion in Stablecoin Supply: The crypto industry has become increasingly reliant on centralized stablecoins, most notably Tether, which has ballooned to over $20 billion in circulating supply, taking 75% market share in USD-based tokens.
- China Launches Digital Yuan: Central banks around the world may be taking their first steps towards CBDC, but not the PBoC. China rolled out its CBDC at a rapid pace in 2020, trialing pilot programs all over the country.
- Record Crypto Credit Growth: Crypto credit products of all kinds has seen a tremendous year of growth, from derivatives to on- and off-chain lending. Credit-fueled selloffs will be a risk to watch.
- Regulatory Scares for BitMEX and OKEx: These events might have been fatal to risk appetite in any other year, but 2020 proved that crypto investors are nothing if not resilient. Bitcoin stuttered briefly after both incidents, but quickly recovered.
2021 is certainly starting with a bang with BTC above $30k and ETH crossing $1k. Some macro trends are emerging and will play out in 2021:
- Crypto Mass Adoption: It did not take many new entrants to send bitcoin to all-time high in 2020. With trillions of dollars sitting on the sidelines from retail and institutional investors alike, it is really just the beginning for crypto adoption!
- Growth of Institutional Crypto Brokerages/Custodians and Asset Managers: Institutions will turn towards institutional facilitators when entering the crypto markets, while others will choose asset managers like Grayscale.
- Continued Growth in DeFi: DeFi will continue to grow significantly in 2021, and the TVL will increasingly be captured by aggregators and decentralized asset managers, which offer the ability for investors to set-and-forget their investments.
- NFTs - Art, Collectibles, and the Tokenization of Everything: We believe NFTs, especially digital collectibles and art , will continue to trend upwards as creators join in and new platforms emerge.
- Smart Contract Chain Scalability: ETH continues to be the platform to watch, especially layer 2 solutions. We expect some of the activity to migrate to alternative chains with strong ecosystems, and at an accelerated pace if scalability solutions fail to deliver on ETH.
- Growth in Global Regulatory Frameworks: As crypto becomes more mainstream, we should expect further regulation for all players in the crypto industry, especially via the FATF Travel Rule.
- Crypto Options Will Finally Hit the Big Time: Crypto derivatives will see a tremendous growth as institutions join the market. In particular we anticipate an explosion in crypto #options.
To read the full version of the Yearly Review, download the PDF version in the link below:
https://crypto.com/en/research/article.html?category=macro&page=yearly_review
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