What a year it has been. While 2020 has not finished yet, we can definitely say the past ten months has been a roller coaster ride for the crypto market. The trend and hype about DeFi rose in the middle of the year, but it immediately subsided just a few months later. Bitcoin crashed very fast in early March but it’s been generally going up ever since.
We still have November and December to see whether we will end the year with some anticlimax moments or not but I know plenty of traders who have been taking profit and would still be generally happy with their crypto trading even if BTC goes down in the last two months of the year.
So, without discounting the importance of November and December of this year, should we start discussing what 2021 will bring to the crypto market? Let’s talk about possible scenarios that can happen.
Scenario A: 2021 Will Be Like 2017 Before It Eventually Goes Bust
The first possible scenario (and perhaps one of the most likely) is that 2021 will be quite similar to 2017. Why did I say this? It’s simply because 2020 reminds everybody of 2016. Both 2016 and 2020 were the year of Bitcoin halvings. And yes, Bitcoin price rose in both 2016 and 2020 (so far). There was also some altcoin bullish moments but generally BTC market dominance have been going well (again, just like 2016).
I feel that it has become a self-fulfilling prophecy. When everybody expected Bitcoin to rise after halving, they pumped it, and eventually the price went up because of these same buying pressures. While some other analysts have other theories but this is most likely true to some extent. I mean, there are also other theories why price has been going up this year. For example, the fact that Bitcoin followed the stock market’s price action. It is definitely true from March until September but it’s been decoupling in the past few weeks where stock market has been going down but BTC has been able to slowly going up.
This is why I think the long-term prediction is more logical to follow 2016-2017 price model, which means this year is the repeat of 2016 while 2021 is the repeat of 2017. I do believe that BTC will be able to make a new high in 2021 even though it might go bust in 2022 or even late 2021 (to follow 2018’s price crash). After all, the market works in a cycle, pump and dump.
Scenario B: Post-Pandemic Economy Will Change Everything
This scenario is also very likely. Unlike scenario A that I have outlined above, this scenario B does not repeat price action from 2016-2017 because we will get into a very different economic outlook post pandemic. As of now, we are still in the middle of pandemic, and many cryptocurrency prices have been affected by stimulus packages here and there due to governments’ struggle to keep the market afloat.
But here’s the thing, what is actually going to happen in 2021 or even 2022 when the world starts to recover? With Europe entering second wave lockdowns at the moment, it’s very hard to predict what the future will be. But if there’s a future for non-health industries, cryptocurrency might actually benefit a lot from the post-pandemic world. After all, the whole industry is fully online and remote, and its supply adopts a deflationary mechanism (unlike fiat’s printing machine).
And if the world becomes much worse than today, I actually think BTC and the crypto space will suffer for a month of dump (due to liquidity crisis), but in the long term, it should keep going up, as more and more people start looking for alternative investments and safe havens outside physical metal.
We don’t know what’s going to happen. Scenario A, Scenario B, or other scenarios that we haven’t mentioned here. Anything is definitely possible as we don’t have any crystal ball. But let’s be honest. Whatever happens, the crypto industry definitely has an advantage compared to most other industries (as long as they are not health-related) in the post-covid world. Let’s see, though! It’s interesting to see what 2021 will bring.