Fidelity Digital Assets Report: Trends in 2021 and Potential Future Impacts

2021 would undoubtedly be an eventful year for Bitcoin. From around $ 29,000 at the start of the year to $ 47,000 at the end of the year, Bitcoin is up 64% in 2021. The first is after rising over $ 63,000 to highs history in the fourth month (increase of more than 100% over several months) before a loss of more than 50%. At the end of July, Bitcoin was pushed below $ 30,000 at the start of the year. It hit all-time highs of over $ 67,000 in November. Bitcoin is currently trading around 31% lower than its recent high. Below we will take a look at the key events and highlights that are occurring in digital heritage.

In recent years, retailers and businesses have increased their awareness and respect for Bitcoin and digital assets.

Fidelity Digital Assets 2021 Institutional Investor Survey found that 71% of U.S. and European companies surveyed are willing to share digital assets in the future.This figure has increased in all areas studied over the past three years, and the current and future distribution of digital assets is expected to increase further in 2022.

In 2021, stocks will continue to grow as cryptocurrencies and traditional businesses have developed more vehicles of capital to meet the needs of investors and professionals. Spot ETFs have not been approved, but insurance for many Bitcoin ETFs based on futures is a silver lining, giving hope that other products and services interacting with the digital asset will be recognized at the future. Responsibility management will be the key.

Today, the market capitalization of digital assets exceeds just over $ 2 trillion. Despite its huge growth, it is still small compared to its hundreds of millions and millions of assets worldwide. The new rules matter as crypto companies continue to push the limits of possibility and develop new products related to digital assets. Proper management and financial institutions working together to provide investors with access to these assets can increase the overall value of digital assets. Necessary guidance from regulators reduces customer concerns about compliance and risk. In this sense, we anticipate some impact on management, financial institutions and distributors as 2022 approaches. Management and access to equipment are in hand and we hope that 2022 will be clearer than ever. Because we believe it is the key to integrating most of our hundreds of millions of millions of natural assets into digital heritage.

Federalism and Policy Reform - The Different Perspectives of the United States

In recent years, governments around the world have taken important steps towards digital assets. We have seen some restrictions in China. In particular, there was a clear statement that the entire cryptocurrency market was illegal in September after the prospect of a mining crash in May, and finally, in November, there is a statement to eliminate all exploitation. mining.

The government of El Salvador, on the other hand, became the first country to recognize Bitcoin as a valuable commodity (El Salvador still uses US currency, but all businesses must accept Bitcoin as a form of payment). El Salvador also announced its own digital wallet that distributes free bitcoin to its citizens. The President of El Salvador has repeatedly stated that the country has purchased Bitcoin as a repository and will invest $ 1 billion in "Bitcoin Bonds".

We believe that time will tell which path is better. History shows that capital flows to the best, and encouraging innovation leads to wealth and prosperity. We also believe that the increasing adoption of Bitcoin will make countries that receive certain Bitcoins today more competitive than others. So even if you don't trust Bitcoin in other countries, you should still buy Bitcoin as an insurance policy. In other words, you can pay a small amount today to protect yourself against a larger amount in the future. So we wouldn't be surprised to see another king buy Bitcoin in 2022. The same is likely true for central banks.

While we've said before that the rules for digital assets in the US are unclear, the expansion for 2021 is about the rules for digital assets that have been put in place and through the most recent law. The law is ambiguous and broad in its definition of "broker", especially in terms of traditional traders, including those who would otherwise be miners, hardware manufacturers and software developers. The law will not apply until 2024 and several amendments have already been proposed. The most important thing for us is that digital asset management will become legal along with other priorities as digital asset classes mature and grow.

Bitcoin Mining - One year of protection and recognition

As mentioned above, Bitcoin's hashrate fell more than 40% during the month of May 2021 to July 2021, with China banning any evidence of cryptocurrency mining operations. Analysts believe it will take at least a year for the hashrate to return to its previous level. So the most surprising result of 2021 is that the hashrate recovered as soon as possible as the 30 day hashrate is now about 5% higher than its previous height! According to the University of Cambridge, the United States now holds around 35% of the global Bitcoin hashrate in the United States, which is the biggest winner in the biggest “migration” of miners, from 35% to 35%. 2 years ago 4%.

Additionally, mining companies experienced major issues, buying more bitcoin and holding more bitcoin on their balance sheets.

The hashrate recovery is fantastic and we believe it reveals some important issues to keep in mind in 2022 and beyond. First, this represents another real risk for the Bitcoin Core network. What if so many minors were closed? As we all know, the issue is only fixed every two weeks, and the network has to keep running, adding a new block of changes every 10 minutes on average. It has now been tested and the Bitcoin network is working fine.

Given that Bitcoin miners have the best financial backing to make the best Bitcoin adoption estimates and prices, we believe their most recent move is the current Bitcoin cycle. . excess profitability. Thus, it improves the strength and stability of the Bitcoin network.

Ecosystem expansion

The heritage of the digital ecosystem continues to expand and the number of successful plans in 2021 continues to increase. The biggest non-Bitcoin issues that have unfolded in recent years include the proliferation of stablecoins, growing financial uncertainty, and early NFTs.

Stable coins have become an integral part of financial management, according to Coin Metricsii, growing by over 385% from 2021. NFT hit levels with insane rates in the first half of 2021. By Christie The Competition, an artist named Beeple sold NFT $ 69 million, set the record for highest price paid for art.

In recent years, we have seen tremendous growth in many applications.

In this model, it is hoped that the organization's interest in DeFi will continue to grow. One of the DeFi issues that arises has to do with creating direct interconnects that seek to eliminate the need for a trusted third party to support the business of two chains. The integration of siled blockchains is an important and attractive design to create greater interaction with digital devices and their users.

Based on stable financial management and pre-gold research, we also believe that the dawn of decentralized algorithmic stability of coins has emerged. Managers are increasingly asking questions about the savings held by many large securities investors and whether the rapid expansion of fixed income is a threat to traditional finances. This puts more DeFi protocol and users relying on stable coins under less than ideal conditions. Stable algorithmic coins with stable assets backed by numbers and the use of digital assets hold great promise for the digital heritage world.

Therefore

Overall you can say.2021 is the year of further confirmation that digital assets have arrived and will continue to exist.We are seeing more and more people and individuals using it and more and more companies are adding to their counterparts and even becoming the first country to announce the benefits of fiat. The Bitcoin network has proven to be strong even though the second largest market in the world has thwarted it. We have seen an increase in demand for stable coins, and commodities like these have attracted regulators. In addition, digital heritage has entered the legal and political spheres and seems to be receiving more attention. Finally, digital tools have extended to art, culture, music, sports, etc. All of this makes us wonder where unbelievers should believe that digital assets will never be lost.