You can't overestimate the value of cryptocurrency predictions from insiders - the very people driving the crypto revolution - as we head into 2021.
With cryptocurrency quickly gaining favor on Wall Street, every investor needs to understand this new asset class - and know what to expect.
That's why we reached out to six cryptocurrency leaders who derive a living from crypto. You can find their insights below.
Bitcoin again outperformed all other assets in 2020, rising more than 300%. That comes on the heels of a 94.4% gain in 2019.
And yet Bitcoin still has a remarkable amount of upside. My own prediction is for Bitcoin to reach $100,000 by the end of the year, a 240% gain from where it finished in 2020.
But others have much higher targets. A recent Citibank report set a December 2021 Bitcoin target of $318,000 - a gain of 981% from where it ended in 2020.
And of course, Bitcoin isn't the only crypto game in town. Most cryptocurrencies follow Bitcoin's price lead. And some have performed even better than the No. 1 cryptocurrency.
The No. 2 crypto, Ethereum, rocketed 473% in 2020.
The crypto world continues to innovate as well. One of the most exciting developments of the year was decentralized finance, or DeFi. That trend is expected to accelerate in 2021.
What's remarkable is that 2020 was just a taste of what we'll see in 2021 - as you will see when you read what these crypto experts told us.
Their answers have been edited for style and clarity.
Tim Draper
Founding Partner, Draper Fisher Jurvetson (DFJ) venture capital firm
A lot happened in the world of crypto in 2020. What do you think was the most significant development - one that will have the most lasting impact?
The biggest developments are yet to come. Over the next few years, we will be able to run our entire businesses on the blockchain with deals done on smart contracts. We will allow retailers to accept crypto without having to pay the bank 2.5% to 4%. See OpenNode.
What are your expectations for crypto in 2021? What should people look for?
Using Bitcoin at retail will become standard practice for any retailer who wants to stay in business. Governments will begin the process of being able to tax crypto transactions or income through accounting systems like Cryptio.
Many crypto forecasters see a major rally for Bitcoin in 2021, with predictions ranging from $50,000 to $300,000. This is in the territory of your own prediction of $250,000 by 2022. What do you see happening next year? Will we still need to wait until 2022 to get to $250,000?
It is a short wait now.
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Peter McCormack
Host of the "What Bitcoin Did" podcast
A lot happened in the world of crypto in 2020. What do you think was the most significant development - one that will have the most lasting impact?
MicroStrategy - opened the door to companies to seriously consider having Bitcoin on the balance sheet.
What are your expectations for crypto in 2021? What should people look for?
Bitcoin, not crypto - I expect Bitcoin to set all-time new highs and possibly exceed $100,000 per coin.
Many crypto forecasters see a major rally for Bitcoin in 2021, with predictions ranging from $50,000 to $300,000. Do you expect a major rally? How high do you think Bitcoin could go?
See point #2.
Cory Klippsten
Founder, SwanBitcoin.com
A lot happened in the world of crypto in 2020. What do you think was the most significant development - one that will have the most lasting impact?
The way Bitcoin's price behaved during the global flight to liquidity in March set the tone for the rest of the year. Many of the institutional players like [Stanley] Druckenmiller and [Michael] Saylor, and analysts like Lyn Alden, have said on record that they paid much more attention when they saw Bitcoin behave in that environment akin to gold, but amplified. That event accelerated a move towards Bitcoin becoming a must-have rather than a speculative trade.
What are your expectations for crypto in 2021? What should people look for?
A lot of the same, but louder. We probably haven't seen the last of the affinity scams, and governments will make noise about launching their own. FUD [fear, uncertainty, and doubt] around privacy, self-custody, and environmental concerns will build to a crescendo. We might even hear louder vocalizations that Bitcoin is a direct threat to U.S. hegemonic concerns, but it will be met by builders and innovators who move and launch projects faster than the narrative develops.
Many crypto forecasters see a major rally for Bitcoin in 2021, with predictions ranging from $50,000 to $300,000. Do you expect a major rally? How high do you think Bitcoin could go?
We do expect a major rally. Humans are bad at understanding exponential network growth, not to mention absolute scarcity. So as with previous market cycles, it's difficult to project where Bitcoin's price might reach if it goes parabolic again. But with the current macroeconomic backdrop and institutions beginning to pile in, going past $100,000 in 2021 might even be a conservative estimate.
Lihan Lee
CEO and co-founder of Xangle, a public data disclosure service for the global cryptocurrency market
A lot happened in the world of crypto in 2020. What do you think was the most significant development - one that will have the most lasting impact?
The introduction of DeFi protocols that had been long in development over a year or more to the crypto market could be what has the most impact over time. DeFi protocols extend ownership and governance rights to users who have a stake in the protocol. Owners can remain anonymous, and their decisions are guided by game theory, prisoners' dilemma, and the notion that on the average, what is best for the individual is best for the group. DeFi protocols have the capacity to balance the financial field by ensuring that anyone can be banked and take a share of the financial wealth of the masses.
What are your expectations for crypto in 2021? What should people look for?
With the most recent price rallies from major crypto assets like ETH, LTC, and especially BTC shattering all-time highs, the case for a dynamic crypto scene in 2021 has been made. Combine the price action with developments in Decentralized Finance, the SEC showing its claws against ICO issuers, and large-size crypto purchases from major institutional funds, and you have a recipe for one of the most interesting periods in crypto history. I expect a greater adoption of crypto assets and blockchain technology both in the back-end and front-end of business operations across various fields - most notably in financial services. People should look out for authorities to continue hunting down bad actors in the crypto space who have up to now shined a negative light on the industry. As they get weeded out, the industry will flourish. I also think, more abstractly, that we may begin to see cracks in the global financial system, which could signal a shift in how money is valued and who holds the economic hegemony.
Many crypto forecasters see a major rally for Bitcoin in 2021, with predictions ranging from $50,000 to $300,000. Do you expect a major rally? How high do you think Bitcoin could go?
I expect Bitcoin to rally in 2021, but making exact predictions on price doesn't really help anyone make informed decisions. My prediction would likely be wildly different from so many others, which would simply confuse people who need concrete information to act on. While I'll say that Bitcoin's upside potential is nearly limitless, there is absolutely no way to know how high or low the price of Bitcoin will go.
Pete Rizzo
Advisor at Bitcoin Magazine
A lot happened in the world of crypto in 2020. What do you think was the most significant development - one that will have the most lasting impact?
To me, the most significant development is the continued success of Bitcoin as a technology.
Given how easy it has become to launch and aggressively market a cryptocurrency, it's easy to forget that Bitcoin is an innovation. It remains the first working decentralized digital currency. A decentralized digital currency never existed before Bitcoin, so we still don't know much about how one would (or should) operate in practice.
Abstracting away all the arguments, we now know a network of computers can run a shared software, and that the data secured by the rules of that software meets the definition of money (by holding value over time). The data within Bitcoin's network has held value now for over a decade.
What are your expectations for crypto in 2021? What should people look for?
What we'll get to see in 2021 is the global market again asking how Bitcoin should be valued. I suspect that investors will find that there has never been any asset capable of holding value that remains outside the operation of a country or company and price it accordingly.
Equally interesting will be the regulatory reaction to the success of Bitcoin as an economy that operates outside of any government's control.
As Kraken Chief Legal Officer Marco Santori says, we're heading into the "and then they fight you stage." I think there's a real risk that there is misguided or reactionary legislation applied to the industry and that those who believe in the technology will have to passionately fight for their principals and the right for everyone to transact without intermediaries.
Many crypto forecasters see a major rally for Bitcoin in 2021, with predictions ranging from $50,000 to $300,000. Do you expect a major rally? How high do you think Bitcoin could go?
Yes. We now have a lot more data on how Bitcoin has held value over time, and it appears that there is more data to suggest that this value displays a cyclical price pattern. What is likely to happen will be a "third Bitcoin bubble" on the scale of what we saw in 2013 and 2017 when Bitcoin surged past all-time highs as global investors were asked to evaluate it as a true non-government money.
The big question to me is, with data suggesting the Bitcoin market is cyclical and predictable, will critics begin to admit that it may no longer be speculative or volatile? And, given that the Bitcoin economy continues to reward new entrants, will more people withdraw their money from the legacy system and embrace it as an alternative?
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Jeff Dorman
CIO of Arca, an institutional grade financial services firm building products utilizing and investing in digital assets
A lot happened in the world of crypto in 2020. What do you think was the most significant development - one that will have the most lasting impact?
With the rise in Bitcoin infrastructure (Fidelity, CME, Grayscale, Square, Paypal, etc), and the rise in "Bitcoin tracking stocks" (GBTC, MSTR, SI, GLXY, etc), just about anyone who wants Bitcoin exposure directly now has a myriad of options to choose from to get that exposure. That will be great for adoption. But in some ways, it's a double-edged sword - it will put a majority of businesses built specifically around Bitcoin out of business. Any actively managed hedge funds and passive indexes built around high allocations to Bitcoin, or businesses built around trading of Bitcoin, will have a very short shelf life. Investors now have the knowledge and means to buy Bitcoin themselves - they will not rely on high fee active managers to give them this exposure.
Last year proved that Bitcoin is now a global macro asset, graduating from the ranks and comparisons of other digital assets and moving towards global gold/currency comparisons.
What are your expectations for crypto in 2021? What should people look for?
Prediction #1: The Wall Street Rush - After finally learning about Bitcoin and cryptocurrencies, Wall Street and institutional investors will begin to learn about the three other types of digital assets.
Investment banks and broker/dealers are scrambling right now to "cover Bitcoin" as fast as they can. We are already getting calls from second- and third-tier investment banks, looking for help regarding how to get started. Since the Street is not set up to trade Bitcoin directly, they have to find other ways to insert themselves into the money grab. At first, this will mean writing research on publicly traded companies and trusts that directly or indirectly track Bitcoin. While this is a start, this really isn't much of a value-add service as those who want Bitcoin exposure can now get it directly.
As a result, soon the more forward-looking investment banks and broker/dealers will realize that the bigger opportunity is not trading Bitcoin, but rather from underwriting fees generated by bringing new tokens to market, issued by traditional "non-crypto native" companies. It is our opinion that every company with a retail customer base will eventually have a token in their capital structure, from Starbucks and Delta, to Twitter and Amazon, to your local mom-and-pop restaurant, barbershop and gym. Every company with a retail customer model will issue a token within three to five years. The faster investment banks learn about this other area of digital assets, the faster companies will be able to bring well-structured tokens to market. This is the private placement market all over again, which is over $1 trillion in outstanding debt and equity.
Prediction #2: Thematic investing will once again be a major driver of 2021 investment gains.
In 2020, there were a few sectors (DeFi, store of value) and narratives (low token inflation, velocity sinks, user rewards) that drove most of the price action. In 2021, we believe the list of sectors and narratives will expand further, driving the majority of investment gains. Sectors include:
- NFTs / Gaming- Gaming is still the most natural non-money use case for blockchain, but with the rise of non-fungible tokens (NFTs), there will be strong growth in specific games and ecosystems. We'll see a few huge winners and a lot of losers, but the winners will be obvious and investable due to the ability to see growth metrics via public blockchain data in real-time.
- Digitization of the Fan Experience- This is a continuation of our 2020 sports theme. The live fan experience is never coming back to what it was post-COVID-19. Instead, sports teams, artists, musicians, athletes, and other celebrities are going to continue to search for opportunities to engage their fans personally using a digital asset. From Chiliz (CHZ) monetizing the fans of sports clubs, to Audius and Vezt monetizing songs and music royalties, to a host of new developments involving individual athletes, celebrities, and maybe even sports networks like ESPN, we believe individual fans will soon become financially incentivized to back the teams and individuals they love so much.
- Growth in India- While Binance has made the first real steps towards penetrating consumers in India, we feel that having a strong Indian presence will be of utmost importance for token issuers and infrastructure companies. This is a largely untapped corner of the world when it comes to digital assets adoption.
Many crypto forecasters see a major rally for Bitcoin in 2021, with predictions ranging from $50,000 to $300,000. Do you expect a major rally? How high do you think Bitcoin could go?
Bitcoin will rally every year as long as rates are low/negative, the USD continues to fall, and M1 money supply continues to increase. Central banks around the globe are daring investors and individuals to hold onto cash, with no plan in sight to end this. These investors have nowhere to go other than equities, hard assets, and now digital assets (which includes, but is not limited to, Bitcoin). Bitcoin has no ceiling - the demand comes from every person/company/investor who holds cash or fixed income. Bitcoin is now being bought by individuals in emerging market economies, speculative investors, corporate treasuries, macro funds, managed futures funds, quant funds, gold bugs, etc. How many other assets in the world besides U.S. Treasuries and U.S. dollars can be claimed and utilized by so many different types of people and investors?
So yes, Bitcoin is going higher. But rather than look at the upside, we prefer to look at the downside. The supply/demand imbalance means the downside floor has never been higher, which means the risk to owning Bitcoin has never been lower.
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Institutional money has been a primary force in driving the stock market to new highs. And now some of that money has started moving into crypto.
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About the Author
David Zeiler, Associate Editor for Money Morning at Money Map Press, has been a journalist for more than 35 years, including 18 spent at The Baltimore Sun. He has worked as a writer, editor, and page designer at different times in his career. He's interviewed a number of well-known personalities - ranging from punk rock icon Joey Ramone to Apple Inc. co-founder Steve Wozniak.
Over the course of his journalistic career, Dave has covered many diverse subjects. Since arriving at Money Morning in 2011, he has focused primarily on technology. He's an expert on both Apple and cryptocurrencies. He started writing about Apple for The Sun in the mid-1990s, and had an Apple blog on The Sun's web site from 2007-2009. Dave's been writing about Bitcoin since 2011 - long before most people had even heard of it. He even mined it for a short time.
Dave has a BA in English and Mass Communications from Loyola University Maryland.