Crypto’s 2020 (A Year in Review)
This special edition of “Crypto’s Last Week” accounts for the most impactful crypto-related news published throughout 2020.
The DeFi Boom
After the crypto crash of March, DeFi became a regular acronym found in crypto news sites, mostly referring to the new “yield farming” craze, also known as liquidity mining. This sudden rise in market interest saw the DeFi industry’s locked value blast from $600 million to $16 billion by December 2020. This DeFi boom highlighted the benefits and risks still present in this sector of the crypto industry and has placed high hopes for what is still considered a ground-breaking concept that is blooming in a young industry.
Ethereum and Polkadot
Two of the most anticipated topics throughout the year were the initial phases of ETH2.0, meaning the beginning of the end for the PoW version of the Ethereum Network and its first steps towards a PoS consensus algorithm, the Ethereum staking stage. Also, the launch of Polkadot’s mainnet was a very hot topic that has seen eyes and money pour into this parachain focused blockchain protocol with expectations running high regarding the untapped potential that we could be witnessing.
Bitcoin’s Crash and Rise
March saw the worst month in terms of volume and liquidity for the crypto market, bringing Bitcoin, with its over 50% of market dominance, down to $3,600 and the rest of the crypto market following the digital gold. This was a short-lived stage and within the next quarter, BTC had regained what had been lost and was on track to have a positive recovery. The halving in May also had a “shock effect” on supply reducing the number of daily BTC mined from 12.5 to 6.25. By Q4 2020, BTC reached yearly highs and in December it surpassed its all-time high, where it currently has been fluctuating and slowly but steadily continues to push higher.
Institutional Involvement
For some the inflow of capital coming from large institutions was a given, for others, the uncertainty of the global pandemic and its effects on cash flow and reserves brought worrying scenarios, however, in light of the previously mentioned central bank actions, the second half of 2020 saw a push, by institutions such as MicroStrategy, MassMutual, and Square among others to invest fractions or the entirety of their reserves in Bitcoin as a way to hedge against inflation. Additionally, financial services giants PayPal and Visa entered the space with products that would enable retail investors to access the market.
Covid 19
The global pandemic caused by an unknown coronavirus made 2020 begin with a BANG! Showcasing the effects it could have on day to day life, initially, throughout Asia followed by the Pacific territories, Europe and finally moving towards the Americas, Africa, and the Middle East. This brought immense downward pressure on the crypto market, only to open a door of potential growth in various sectors throughout the year.
Central Banks and Quantitative Easing
As a direct result of the effects on the global economy due to critical lockdowns and shutdowns of whole sectors around the world, Central Banks began a coordinated effort to inject liquidity to the markets aim to boost spending and investment in the economy. Even though this was a necessary measure, it has brought Bitcoin and Gold to the forefront of discussions due to the potential rates of inflation that are expected to arise from these actions.
The CBDC Race
Central Bank Digital Currencies were also a hot topic during 2020, due to the increased interest from central banks on pivoting towards digital currencies as a more secure and efficient vehicle to transfer value. We’ve seen major actors such as the European Union, South Korea, Australia, Canada go through different stages of evaluation and study, while China has led the way and began the implementation of pilot programs in different jurisdictions within its territory. Impressively, The Bahamas has been the first nation to officially launch a CBDC.
Thank you for joining us and reading the last 2020 edition of “Crypto’s Last Week.”
Don’t forget to follow us for a daily review of cryptocurrency and blockchain news on Twitter and LinkedIn.
