The crypto markets have had an interesting run-up over the past 6 months, with most people looking ahead for what’s yet to come. While many people are currently anxious about the drop in prices, others are already strategizing what to do next. Buy bitcoin? Invest in altcoins? Or start looking at the NFT markets instead?
In this article, we look at the biggest profit-making opportunities in the crypto market that are still ahead of us and how to know best to invest ahead of it to maximize your profits. Keep in mind that this article aims to serve as an educational resource, and thus should not be taken as financial advice. That said, let’s delve in and look at the biggest events that are yet to occur in 2021.
The Ethereum flippening refers to a theory that has gotten quite some backing over the past few months. According to cryptocurrency investors, the transition of Ethereum into a staking consensus (ETH 2.0), paired with the much-awaiting upgrade EIP1559, will be the catalyst that will help its price reach new highs in the ETH/BTC pair.
Many believe that the current value of Ethereum does simply not reflect what is expected to happen once Ethereum becomes both deflationary and PoS-based, something which will massively increase its perceived value by new and experienced investors. Currently, Ethereum already has more users and use cases than Bitcoin, while transactions on the network as also more than the “king”.
Now, imagine what will eventually happen to the price when:
- Transaction fees drop from >$100 to near zero
- Users are able to stake their coins and earn rewards
- Supply starts to shrink due to more coins burned than entering circulation
- Increased use cases and perceived value increase its adoption
- Ethereum-based DeFi protocols continue to increase in importance.
Chances are that we will see the flippening happen sometime this year, and it is yet unknown how Bitcoin will be affected by such a historic event.
DeFi Summer V2
The innovation of decentralized finance continues to occur at a rapid pace as we now see many protocols being developed to support the existing market. As DeFi strengthens, the banking system weakens, and as a result, more people start to explore the benefits of the technology instead of simply its profit-making potential.
Many argue that we will soon experience a second DeFi summer, similar to the one we saw last summer when many Ethereum-based projects related to DeFi experienced massive growth in a short period of time. Theory is, of course, only speculation, and we will need to wait and see if this will really be the case. However, it is a good idea to try and better understand the big players of the DeFi space and invest accordingly.
Increased institutional adoption
While the market seems to be rather stagnant as far as institutional announcements are concerned, we see both the amount of large wallet holders increase (100-1000 BTC), and many OTC purchases on Coinbase. Many argue that these buyers are institutions, loading up their bitcoin holdings before making a public announcement about it.
Others, like Facebook, hint at their preference towards the popular cryptocurrency through cryptic Twitter messages, while some, like Tesla, use their reputation and power the make Bitcoin more sustainable before investing more in it.
Overall, we can expect to see more institutions going public about their Bitcoin holdings as inflation continues to increase due to excessive money printing on a global scale. And, depending on the name and reputation of the company, one such announcement could have a massive impact on the price of bitcoin.
Continued money-printing stimulates adoption
Speaking of inflation and uncontrolled money printing, the Biden administration is now set to propose another $6 Trillion relief package to support the US economy, an amount that will further weaken the US dollar. As the country is sprinting towards hyperinflation, we can already see real estate prices, as well many items increase in price, with the average salary remaining the same.
Money printing does stimulate adoption, especially from institutions, as their savings (treasury reserves) essentially turn into a melting ice cube throughout the process. While most have not gone public about it, many now believe that governments and nations/states are also investing their central bank reserves into the popular cryptocurrency as a hedge against a potential financial collapse.
If you’re familiar with Dan Held’s work, we strongly recommend checking his content on a potential Bitcoin Supercycle, which poses the biggest opportunity for investors. In short, a supercycle refers to the concept of a rapid price increase in the price of bitcoin due to a supply shortage. This shortage could occur any day now, as we experience the negative side of inflation.