Messari: Top 10 Crypto Investment Trend Predictions for 2021

Original title: "Messari Annual Report: Bitcoin reaches at least $100,000 by the end of 2021"

Original source: Babbitt

Recently, Ryan Selkis, the founder of Messari, mentioned in his 134-page "2021 Crypto Investment Theory Report" that the next 2021 crypto market will usher in He also expects Bitcoin to reach at least $100,000 before the end of 2021, and at the peak of this cycle, the total market value of the entire cryptocurrency market will hit $3 trillion.

This article is the first part of the report: Top 10 Crypto Investment Trends for 2021.

Crypto investing has been chasing compelling narratives, not 'fundamentals', and in the short term, this It's also unlikely to change.

The good news is that there has never been a better narrative environment than today, and there may even be some compelling "fundamentals" to back up those narratives, I Very bullish on the prospects of the crypto market in 2021. Optimism is not beyond consensus, I think the next bull run will be a "big bull run" with bitcoin hitting at least $100,000 by 2021 and the total crypto market capitalization at the peak of this cycle hit $3 trillion.

Here are the top ten narratives that I think will drive this bull market. In fact, I think they're also long-term trends for the next decade.  

1. "Blue Chips": True Value and Relative Value 

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One of the most frustrating things about the ICO boom of 2017 was that so many smart people became obsessed with the idea that dozens of cryptocurrencies could end up being viable investments. So many tokens that can earn a fat currency premium is complete nonsense, we've argued from day one that "money" is a winner-takes-all market where even the losers of the competition Differentiating features need to be offered to win long-tail market share. “Utility” tokens, on the other hand, either find a way to capture network fees, or fade away with the emergence of cash-generating network assets.

The thesis is validated, and since we see actual usage, it becomes easier to think about assets on a relative and fundamentals-driven basis. The boundaries are blurry, but we usually divide encrypted assets into six categories:

1. Currency (mainly proof-of-work currency, such as BTC);< /p>

2. Smart contract platform tokens (ETH and its friends);

3. Cryptodollar (stable currency);

4. DeFi tokens ;

5. Anchoring & synthetic assets;

6. Web3/NFT assets.

If you compare Bitcoin with other PoW currencies, you will find that Bitcoin's market share is about 90%. If you compare ETH with other smart contract platform tokens, the share of ETH is close to 70%. It is likely that there will be a large group of people who will think that "ETH is money", but I personally believe that pure currencies such as Bitcoin are different from platform tokens such as ETH (more on this later).

For stablecoins, the "dominance" of the market may not affect VC betting, but it can help you monitor systemic risks. As of now, Tether It still occupies 75% of the market share of the dollar-anchored currency market.

DeFi and Web3/NFT, and synthetic assets have more bespoke value drivers.

That makes sense! Valuations for these assets can be derived from the underlying fees generated by their markets, or from the "real" digital or financial assets they represent. Even though most cryptoassets are correlated, we are already starting to see that assets with real economic models develop a separation over time from other assets.

Domain segregation is not just an exercise in relative valuation analysis, it helps us identify key KPIs for a particular domain . We may care about inflation rate and on-chain liquidity of currency, staking income and network fees of platform tokens, and adjustment/fee-driven income of DeFi network tokens. We are still figuring out what factors are critical to the whole deal, and it may take a long time to agree on a new asset pricing model for crypto.

2. Spam currency and digital gold (BTC) 

Looking back at 2020, amidst the COVID-19 and ensuing lockdown chaos, we saw the true story of Bitcoin: central banks added trillions of dollars to their balance sheets, sovereign debt monetization reached record levels levels and pushed real yields down to record levels (permanent impact).

In short, Modern Monetary Theory (which holds that the ability of countries to spend on deficit spending and monetize debt ) have not only been normalized, but have become policy in 2020. Those in power don’t even pretend to limit spending anymore, and with a divided government in the US, the implications could be enormous. A Democratic sweep in Georgia's runoff election in January would improve prospects for an unrestrained fiscal stimulus package and fuel speculation around bitcoin and other financial and hard assets. If Congress remains divided, the printing presses will keep printing money.

The difference between today and a few years ago is that the importance of Bitcoin in the macro conversation has grown, and its narrative as a gold alternative Got stronger.

1. Paul Tudor Jones called Bitcoin "the fastest horse";

2 , Stanley Druckenmiller (Stanley Druckenmiller) said that Bitcoin betting may be more effective than gold;

3, Chamath Palihapitiya believes that everyone should put 1% of their assets in Invest in Bitcoin;

4. Bill Miller strongly recommends that investors have Bitcoin exposure;

5. JPMorgan Chase wrote that family offices may view Bitcoin as A substitute for gold;

6. Raoul Pal said that Bitcoin is a huge black hole;

This does not only mean that these specific Investor capital inflow, which also represents a trend.

The world's top institutional money managers are finally getting involved, and by removing the risks associated with crypto investing, they have already Open the floodgates for institutional allocation to cryptoassets in 2021, as Anderson (a16z) and Fred Wilson (USV) did for crypto venture capital in 2013.

If you stop reading here, follow the leaders, and allocate some of your portfolio to bitcoin, you may have a prosperous 2021.

3. Ethereum: a market for everything 

Because Ethereum, there are so many novel financial services and applications that have found product fit for the market this year, which is unbelievable. Some cynics dismiss the new projects as bubbles or toys (or both), but I'd venture to guess that almost none of them have actually tested the products.

They are real and quite spectacular.

There is so much to discuss in the world of Ethereum (and smart contracts more broadly) that you will find The content of Fang application is found in almost every part of this report.

Bitcoin may be headed for a big year due to its macro positioning, but Ethereum is already the most important platform for crypto , a platform that will power a whole new financial system and a more open and resilient internet.

In terms of the economic value of transactions happening on the network, in 2021, Ethereum will even surpass Bitcoin all the time.

This year, the Ethereum platform has processed more than $1 trillion in real-world value transfers, a number already surpassed by PayPal. Ethereum faces challenges, but its vitality is undeniable and it will continue to be a platform to watch in 2021.

4. DeFi: Bankless Future 

Suppose you want to create a whole new financial system from scratch: payments, lending, insurance, asset issuance, and exchanges. The first thing you need to realize is that from today's FDIC-insured financial system and etrade accounts to crypto The equivalent is a lot of work.

Over the course of this year, however, such building blocks have emerged in the crypto market.

A parallel financial system would first require a synthetic dollar, asset creation and management, basic lending facilities and reference data infrastructure to maintain asset pegs . Scaling up and making rates and spreads competitive with centralized solutions requires strong incentives for providers of capital. If you figure out how these markets work, you'll have to deal with a lack of circuit breakers and chargebacks, you'll have to protect deposits from "bank runs" and hacks, and you'll need savvy risk managers to set protocol defaults value, defenses against application exhaustion attacks, and low-cost insurance against technical errors.

Sounds interesting? Well, with Maker (encrypted dollar), Uniswap (automatic market maker), Compound (liquidity mining), Balancer (dynamic liquidity pool rebalancing), YFI (smart asset management), Aave (flash loan), ChainLink (data oracle), SushiSwap (defensive countermeasures), CVP (proxy aggregation), and bZx (decentralized bug bounty protocol), we have some of the building blocks needed to build a fully decentralized and algorithmic financial system example.

DeFi is being hyped for a reason and the only thing I can see that will slow down the industry's momentum will be precedent for top market projects Sexual regulatory crackdown (I'm not betting the regulators will).

5. Stablecoins: engulfing the crypto market 

Sometimes numbers can tell a lot. This year, stablecoins have experienced explosive growth in size and usage. Today, over $20 billion in “crypto dollar” stablecoin supply facilitates hundreds of billions of dollars in transaction flow. Ironically, the U.S. dollar remains the reserve currency for cryptocurrencies, and the growing trend of stablecoins shows no signs of abating as more crypto-dollar applications come online and countries launch their own central bank digital currency initiatives.

Despite fears of a possible regulatory crackdown on Tether, the leading stablecoin continues to grow and dominate Its market segment (and the settlement of most international cryptocurrency exchanges). DeFi's explosive growth likely wouldn't have happened this year without a surge in stablecoins, and with $11 billion in USDT on the Ethereum platform, Tether is second only to Tether in terms of economic value stored on the Ethereum blockchain. ETH itself.

Bitcoin will remain the most valuable digital currency (be it a cryptocurrency or a stablecoin) indefinitely, but not necessarily Ethereum and its ilk . The U.S. dollar stablecoin on the smart contract platform and the central bank digital currency (CBDC) issued by the country will exceed the market value of the platform currency itself within 2-3 years. What this means for the security of smart contract platforms is unclear.

6. Encrypted Credit: Locking Value 

Past The biggest boon for cryptocurrencies this year has been the explosive growth of the cryptocurrency credit market. Centralized service providers for retail investors such as BlockFi, Genesis, BitGo, and Galaxy for institutional lenders, and DeFi lending protocols such as Compound, Aave, and Maker have all experienced many years of experience and brought high volatility to the cryptocurrency market. Comes greater liquidity and stability (long term!).

At the same time, they help drive the use of new applications that require a stable base currency and lower transaction spreads. What’s more, credit keeps assets locked in the cryptoeconomy and away from the taxman.

In the past, if you had a major expense, like a down payment on a new house or a student loan repayment, and you wanted to pay for that with crypto proceeds, you would take a huge capital gains tax hit and miss out on the upside to the underlying portfolio. But today, that's different, and you can take out an excess mortgage to pay for one-time expenses like a new home.

In DeFi and centralized services, the availability of on-chain collateralized credit could significantly reduce selling pressure in the next up market. This is true whether you are a retail investor or an institutional investor. And a shock that triggers a cascade of liquidations, while a doomsday scenario, seems more of a late-cycle risk than an early-stage one. The maturity of the crypto credit market is more likely to create one of the most liquid bull markets.

7. Synthetic Assets: Accessibility 

Grayscale Trading, Bitcoin ETF, DeFi Wealth Front, Wrapped Assets, Prediction Market, Encrypted Trading "Securities", On-Chain Index Funds, DAO, Programmable Financial Assets...

Every financial asset you can think of will one day be linked to crypto, and Synthetics is proof that this shift will happen sooner than we understand. I don't want to pre-spoil this part, but if you're in the "blockchain not bitcoin" camp, here's the purple pill part that will get millennial readers excited.

8. Infrastructure: unbound with large crypto exchanges 

Exchanges are the 800 pound gorillas of the crypto market, they make all the money, they reach all the users, and they are involved in almost everything, including trading, custody, lending, staking, research, data , governance and VC. This seems to make many people wonder whether the crypto economy is decentralized after all. But users have more power than people think. There may be switching costs associated with moving funds out of large exchanges, but this is still common.

And it's so much easier than switching banks! The withdrawal of capital from large exchanges such as BitMEX, OKEx, Binance, etc. due to regulatory concerns has been common in recent months. In 2020, funds moved from centralized exchanges to compliant custodians, fund managers, and mobile wallets, while transaction volume moved from centralized exchanges to major brokers and DeFi markets.

Crypto markets have begun (very slowly) to unbundle the trading giants as their spreads and fees tighten. A trusted interface to the broader crypto economy will continue to be more important than deep order books and 100x leveraged casinos.

For those, just look at Poloniex and Bittrex.

We will be keeping a close eye on exchange deposits as a percentage of the overall cryptocurrency market capitalization for signs of rising or weakening trends.

Don't get me wrong, I'm not betting on their decline, rather I expect them to become more aggressive in terms of inorganic expansion.

9, Web3 and NFT: Digital Resource Economy 

This fall, (despite some last-minute hiccups) we finally had the long-awaited launch of the decentralized storage network Filecoin. Since then, other storage solutions (Sia, Storj, Arweave) have also been promoted, and decentralized network tools such as Orchid (VPN), Livepeer (video transcoding), and Helium (IoT device network) have also appeared. These decentralized hardware marketplaces are arguably the most important infrastructure network needed to ensure the network remains open for years to come.

Blockchain is more than currency and DeFi, the Web3 platform opens the door to new digital native assets, such as game products and digital Art, new content and data licenses and non-censorable DNS, etc.

I subscribe to the argument that "nearly all types of NFTs so far may end up being favored," and that the Web3 platform opens the door to a native digital future, Bitcoin and smart contract platforms are primarily the locomotives of the decentralized financial system, but the Web3 network and NFTs are truly key components of a more open internet.

10, Final Boss 

Regulators have benevolently left us alone for years because of Bitcoin’s volatility.

Every peak and trough market cycle is an illusion and the bitcoin crash has regulators thinking this passing fad is eventually dead and not worth regulating .

Now, the $500 billion crypto market, with trillions of dollars in annual transactions, is too hard to ignore. Fortunately, larger investors, lobbying entities, and even regulators (senators now!) have started using the system within the United States. I've dubbed it the "bitcoin rebellion," and as they work their magic in Washington, DC (and Brussels, Tokyo, and other centers of power around the globe), some of us will start thinking about the ultimate passage: how to rebuild a crypto-inspired nation-state.

You said, this is crazy?

Hush.

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