Cryptocurrencies Outlook 2021: The Best Performing Asset Class Is Primed for More
In a year when so many things did not go according to plan, at least one thing did.
And it made folks a lot of money.
When it comes to cryptocurrencies, 2020 actually stuck to the script.
Bitcoin went through its third halvening as expected on May 11, and it has come to life in a big way — more than doubling here in the fourth quarter alone. Along the way, bitcoin has again been the world’s best performing asset, just as it was in 2019.
We’re now seeing the snowball effect.
As the top performer this year and last, bitcoin and cryptocurrencies are fast becoming difficult if not impossible for big institutions to ignore.
That’s huge, as it indicates more big moves and big profits in 2021 …
In just the last month, cryptocurrencies reached several more milestones.
Bitcoin — the first, largest, and most important crypto — rallied through $20,000 and surpassed its previous record high from three years ago. It kept going all the way to $24,000.
Bitcoin’s breakout is one of the year’s most impressive. And that’s saying something in a year of iconic breakouts. The U.S. stock market exploded from its fastest bear market ever to a new all-time high in a matter of months. And the tech-heavy Nasdaq surged over 40% and broke out to a new historic high amid a global pandemic. That makes bitcoin’s breakout even more noteworthy.
I’m not the only one taking notice. Look at the interest in bitcoin as a search term as measured by Google Trends below. You can see that more people around the world are searching “bitcoin” now that any point in the last 12 months. Search for the term skyrocketed last week as the crypto hit a new high.
And here’s the really exciting part. It isn’t just the masses looking for more information about bitcoin …
JPMorgan believes another $600 billion could flow into bitcoin. Considering the asset is worth $425 billion today, that would be a huge catalyst and increase the odds that bitcoin runs to $100,000 and higher.
That’s not some crazy pie-in-the-sky prediction either. The world-renowned research firm arrived at that number by assuming that large pension funds and insurance companies would invest only 1% of their assets into bitcoin. That’s very reasonable, and it could end up being conservative.
JPMorgan also noted bitcoin’s huge growth already. It said:
Alternative “currencies” such as Gold and Bitcoin have been the main beneficiaries of the pandemic in relative terms growing their assets (for investment purposes) by 27% and 227%, respectively.
Even with that growth, bitcoin is just scratching its upside potential. JPMorgan noted that $13.1 trillion went into bonds, $11 trillion into equities … and only $0.3 trillion into bitcoin.
That small amount pushed the cryptocurrency up more than 200% this year to once again be the world’s best performing asset. As the big institutions take notice, the price is positioned to continue higher in 2021.
I borrowed the chart below from financial blog Zerohedge. It really shows how even a small percentage of money moving from gold, cash, and financial assets into bitcoin will be enough to push the crypto above $100,000.
And lest you think I’m overly bullish, JPMorgan said that if bitcoin keeps going like it has been and investors continue to flock in, it could hit … hold your breath … $650,000!
I don’t know about that, but I don’t think it’s impossible, either.
Still, as exciting as bitcoin is, longtime readers know that I see even more potential in altcoins – which are any cryptocurrency besides bitcoin. In my Ultimate Crypto service, I’ve started saying that we’re about to enter “Altseason.”
If you’re a regular MoneyWire reader, you know how bitcoin shot higher after its first two halvenings — 2,135% in 2012 and then 3,122% in 18 months beginning in 2016.
But investing in specific altcoins would have made significantly more money. I’ve told you before about Spectrecoin, which climbed 64,600% in 10 months. That’s 20 times the gains bitcoin saw.
Or Verge, which shot up 1,362,400%!
The blockchain technology that bitcoin and altcoins are built on is just beginning to transform many industries. Blockchain is the software of the Roaring 2020s, and when you invest in altcoins, you are investing in some of the most valuable and revolutionary technologies yet created.
The Hottest Crypto Industry
If you’re not familiar with the term “DeFi,” you soon will be. It is one of the hottest areas in the entire cryptocurrency industry right now, and I believe it is the future.
DeFi stands for decentralized finance, which refers to a world of financial instruments created on a decentralized network outside of governments or large corporations.
It is a global movement toward an open financial system. I’m talking savings, loans, insurance, trading, betting, and more — all accessible in one place to anyone with an internet connection.
The government can never touch it. And there’s no need for an intermediary like a lawyer or banker, which saves a ton of money.
I think of DeFi as a high-tech vending machine. With just a single click of your finger, you’ll be able to take out a loan or mortgage … buy a new insurance policy … make money loaning out your money … invest in stocks, bonds, or any other asset class … and deposit your cash into a safe savings account.
You’ll do all of this in one place — right from your phone or computer — without dealing with middlemen and their unnecessary fees.
The coming transformation will be massive, and I see equally massive potential in select DeFi coins.
As we head into 2021, I think we’re right at the beginning of the next altcoin surge. Now is a great time to buy before the next big uptrend.
On the date of publication, Matthew McCall did not have (either directly or indirectly) any positions in the securities mentioned in this article.
Matthew McCall left Wall Street to actually help investors — by getting them into the world’s biggest, most revolutionary trends BEFORE anyone else. Click here to see what Matt has up his sleeve now.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.