2021 was marked by incredible hype around the crypto market. How did the situation in 2021 differ from the one in 2017?
As a reminder, the Q1 of 2020 – the price of the top coin, namely BTC, soared by more than 800%. It’s incredible as it may sound, but the total crypto market capitalization has reached an astounding 1,050% and amounted to more than $2 trillion.
Some crypto experts noted that the hype surrounding the crypto market is very similar to the situation in 2017. Still, both events are fundamentally different.
Today’s short review will benefit HODLers, who are probably wondering whether to hold coins or sell crypto assets to make profits.
Institutional Investors “Re-energized” the Market
The incredible interest of institutional investors has become one of the drivers of the crypto boom in 2020. The global crisis caused by Covid-19 has encouraged investors to look for alternative ways to invest.
The low entry threshold has made the crypto market one of the best investment options in opposition to the stagnating S&P 500 and Dow Jones.
The sharply increased investment activity instantly accelerated the growth of the BTC price and most altcoins. As a result, the HODLers of crypto assets have made solid profits in a brief period.
Institutional investors have radically changed their minds about crypto. Many conservative financial investors recognized crypto coins as promising instruments with great potential.
According to preliminary estimates, about 85% of large investors announced that they plan to expand their investment portfolios and increase digital assets.
Crypto as A Means of Payment
The excitement around cryptocurrency in 2017 was primarily based on the so-called FOMO (fear of missing out) effect. The bulk of traders did not understand how to manage digital assets to make a profit.
2017 stats show that the average daily trading volume was between $2 billion and $4 billion. Meanwhile, the same figure in 2020 exceeded $100 billion per day.
All this led to the fact that the number of companies using digital assets for settlements with customers began to increase instantly. The hype around bitcoin also played into the hands of end-users who could use coins for online payments.
Growing Pool of HODLers
The hype surrounding the price of BTC in 2021 completely transformed the entire ecosystem of the crypto market. Institutional investors and large financial companies have recognized cryptocurrency as an alternative investment instrument.
As a result, services such as PayPal allowed their customers to buy digital assets – up to $100,000 per day.
It seems that the list of global financial brands offering their clients to use crypto assets as settlement instruments will continue to expand.
For example, such a significant player as JPMorgan has already assessed the potential of investing in crypto and recommended adding at least 1% of digital assets to the investment portfolio. According to the latest news, Morgan Stanley and Deutsche Bank are also actively working in this direction.