Prices are soaring, innovation is breaking ground, opportunities are flourishing and cryptocurrency adoption is relentless. As we begin a new year with unbridled enthusiasm, Kraken examines the past year — one that won’t be soon forgotten.
The year 2020 will be remembered for economic and humanitarian catastrophe. It will also be recognized by the crypto community as the beginning of a new bull market.
The COVID-19 pandemic sent shockwaves through the financial markets and cryptocurrencies were not spared from the carnage. The “Black Thursday” market selloff was one of the worst days for bitcoin as price dropped 41% – the second worst intraday loss in its history.
Since the $3,911 low on March 13, 2020, bitcoin has produced over 700% returns and institutional demand for the premier cryptocurrency has surged as those companies seek a store of value. Favorable legislative action such as Wyoming establishing a path for digital asset banks and institutional adoption from major companies such as Square, PayPal, MicroStrategy, MassMutual, and others have set the stage for a promising future in the cryptocurrency industry.
Kraken Intelligence has compiled a comprehensive report exploring all of the fundamental factors that have influenced the cryptocurrency industry in 2020. Our team provides insight on developments like the DeFi markets, institutional adoption, legislative and regulatory changes, industry innovation, price action and so much more to help market participants for the year ahead.
By downloading this report, we anticipate you will have a greater understanding of where the growth opportunities are emerging in cryptocurrencies, which projects you should consider and an understanding of market dynamics.
- What’s Influencing Adoption – Institutional buying has surged as nearly 6% of the total bitcoin supply is now held in corporate treasury. Wallets holding over 100 BTC grew significantly since the beginning of March and wallets with less than 1 BTC saw double digit growth in that same time period. 2020 is the year when we witnessed a groundbreaking uptick in institutional investor interest.
- The Halving – Provable scarcity is one of the main appeals of bitcoin. The hard-coded event to reduce the block reward subsidy and further enforce the disinflationary trend of bitcoin’s supply growth has often foreshadowed each new bull cycle. On May 11, 2020, the latest halving event occurred and by the end of the year, nearly 90% of all of bitcoin’s 21 million supply had been mined. With demand rising for a limited supply, price has once again shown to be on the rise.
- Yield Farming – The emergence of Decentralized Finance has not only helped growth in stablecoins, but has created a new opportunity for crypto investors – a yield curve. DeFi has provided crypto holders yield in exchange for offering their coins into liquidity pools. The emergence of yield in cryptocurrency is another step in the direction towards challenging the existing financial infrastructure as it provides an opportunity to earn for those holding long term.
- Stablecoin Growth – Stablecoin adoption exploded in 2020 with the rise in Decentralized Finance as traders began utilizing them for yield farming. The total market supply for stablecoins rose nearly 400% to $27.7 billion by end-of-year. As Visa announced that it will connect their global payment network to USDC, it appears this may just be the beginning of a stablecoin paradigm shift. Stablecoins are proving to be an on-ramp for individuals that may have difficulty accessing traditional financial products as well as safe havens in periods of volatility, thus increasing their appeal in a growing industry.