The 2021 Crypto Crystal Ball

It’s that time of year again: announcing the Token Daily Annual Crystal Ball.

Similar to last year’s Crystal Ball and the 2019 Crystal Ball, we asked some friends of Token Daily to do a little armchair fortune telling for the new year. Considering what we’ve already seen in industry trends and patterns, here’s a compilation of what some of us expect in 2021.

Alok Vasudev, Standard Crypto

• Bitcoin continues to cross the chasm, deepening its institutional adoption along the “digital gold” narrative.
• Ethereum begins its institutional phase as it solidifies its role as the “settlement layer” for the new global finance stack.
• The stablecoin issuance hockey stick continues and we see early signs of traction in “stablecoin-native” financial apps/services for individuals and businesses.
• We will see at least one centralized company launch a decentralized, user-owned/operated crypto-network where the crypto-network has legitimate checks and balances over the company’s actions.

Balaji Srinivasan, Investor
In 2021 the real battle of the next decade begins: BTC vs MMT.

Meltem Demirors, CoinShares
Bitcoin becomes globally championed as the antidote to dysfunction. Bitcoin breaks $100k and the institutional buying begins in earnest. Bitcoin mining breakout in 2021 — we see North American mining and mining with renewables dominate the narrative, plus hosting services begin to emerge similar to how the data center industry evolved. Most bitcoin investors still won’t get it but the ones who do will grow massively. We see at least 5 pure-play crypto IPOs, topping $250B in market value by EOY.

Lastly, digital art and online creator economies are gonna explode and tokenization is going to turn creative economics upside down. Culture creators will become crypto rich. Someone will tokenize and sell themselves — I’m taking bids if anyone is interested.

Matt Huang, Paradigm
Crypto strengthens in 2021 as a supermassive blackhole for both capital and talent. Bitcoin becomes consensus. Ethereum/DeFi sees renewed interest from traditional tech entrepreneurs and investors.

Alexis Gauba, Opyn
We will see highly liquid and more capital efficient on-chain options markets. We will continue to see AMM growth with more instrument specific AMMs. More new folks will enter crypto and it will only grow increasingly critical to build an inclusive culture in this space if we hope to live up to our values of creating a better financial system.

Stacie Waleyko, Casa

• The growing ecosystem of hardware wallets and nodes will continue to flourish and trend upwards. We’ll see new players and DIY projects come onto the scene. The last few years taught us this is one of the most rewarding aspects for hobbyists, many of which are eager to build their hardware wallet collection and run multiple kinds of nodes.
• Along those lines, I think we’ll see an increase in development related to the PSBT standard. It shines because it enables interoperability between air gapped devices and the demand for it is only going to grow in the coming year. 2021 is going to be a year of development that will bring a new set of features to hardware wallets/signing devices and expand the way we think about them. This will be driven by work seen in 2020 like efforts to standardize communication via QR codes as well as a proposal for a new PSBT version.
• Increased usage on the Lightning network. Any kind of bull run is going to force activity onto layer two for wins in scalability and lower fees. 2020 was a huge year for Lightning infrastructure and many pain points like liquidity management, routing, and peer selection have been addressed with new tooling. Exchanges that have integrated Lightning, folks who run nodes, and businesses that accept payment via Lightning are going to reap big rewards for their hard work.
• Education and Gen Z adoption. This is my prediction with the least amount of evidence, the one that really embodies armchair fortune telling. I believe price movements in 2021 will drive a wave of highly accessible, beginner friendly educational material. What could follow is more adoption from Gen Z. I mean, who knew 2020 would be the year all the Boomers would come onto the scene? Maximalists may or may not call any of this “true” adoption, but there are many companies well positioned to bring on a new user base with their custodial services and Bitcoin reward programs. I wouldn’t be surprised if we see Bitcoin enter pop culture in a way we haven’t seen before. Who knows? Maybe we’ll see Bitcoin pop up in a few rap videos.

Matt Corallo, Square Crypto
Western countries will continue their multi-lateral regulatory attacks on free movement of crypto, especially as it relates to coins moving into or out of exchanges.

Adoption of better (read: chain-avoiding/compressing like lightning and ZK-based compression) scaling technologies will be more mainstream and move past the early adopter stage.

Linda Xie, Scalar Capital
We’ll continue to see major institutional interest in bitcoin and building out of infrastructure on that side. We’ll also see large-scale coordination through DAOs and significant experimentation in the personal/social token space with a number of prominent creators issuing their own tokens.

Matthew Walsh, Castle Island Ventures
Clarity from the SEC on custody under rule 15c3–3 will unlock even greater levels of institutional participation in the industry. A U.S. pension fund will publicly announce a Bitcoin position, and more than one Bitcoin ETF will be approved. Several cryptoasset infrastructure companies will go public via traditional IPOs and SPACs.

Dylan Field, Figma
The start of a huge bull market as “hyperbitcoinization” mind virus rapidly spreads + drives retail demand, followed by a super big crash (this year or next) after everyone realizes the dollar isn’t going away overnight.

Sunayna Tuteja, TD Ameritrade
Expansion of the bitcoin ‘big-tent’, inclusive of a diverse inflow of consumers, capital and talent. A new wave of human capital, exiting safe/senior careers will bring with them a breadth and depth of skills, experiences and perspectives, contributing to bitcoin’s growth and resilience. The career risk inverts — no longer kosher for leaders and decision makers to be apathetic about bitcoin and blockchain.

Avichal Garg, Electric Capital
In 2021, the crypto will start to realize the promises of 2017. Layer 1 protocols have emerging developer ecosystems, DeFi touches tens of billions of dollars, decentralized infrastructure has early product market fit, artists are making significant income via NFTs, and DAOs are managing billions of dollars. Most of the world will not notice these disruptive and transformative developments until 2024.

Amiti Uttarwar, Bitcoin Core Developer
The bitcoin price:

• will go down
• will go up

Buckle up!

Jaemin Jin, Magic
Covid in 2020 vastly accelerated our world’s shift to digital. This has affected our daily lives, routines — probably everything you can name. It, in fact, has re-engineered our minds to adapt to digitization. Gen Zs already value their TikTok account more than their social security number. I don’t think it’s crazy to say that we may see Ready Player One in the next decade.

Lauren Stephanian, Pantera Capital

• BTC will continue to dominate as more institutions/corporations invest/get involved.
• We’ll see more large fintechs adopting crypto — or at least BTC — as a way to expand their offerings and attract/maintain customers
• There will be continued consolidation of projects and features, particularly in DeFi as projects fight to attract users.

Tess Rinearson, Interchain
It’s getting easier and cheaper than ever to launch new tokens. We’re going to see increasingly specific tokens targeted towards very specific and small communities. Call them “community tokens,” “social tokens,” whatever — these long-tail tokens will each have tiny addressable markets but will collectively act as a bridge between crypto and the rest of the real world. These tiny, targeted tokens will let community members capture value — value that might otherwise leak outwards to the traditional brokers and beneficiaries of capital and access.

Ashley Tyson, Web3 Foundation
In an unprecedented acquisition, Ripple will acquire the languishing Fed, and will transition to offloading their stash of XRP for covid stimulus checks as it is the one, true American cryptocurrency as preferred by banks.

Larry Sukernik, DCG

• Investors will continue to make predictions by extrapolating the 3-month moving average of the latest narratives. Founders will continue to build the ideas they wake up every morning thinking about.
• The thinking around governance and reporting of financials will begin to mature. We will see more projects self-reporting financials in an effort to improve transparency, accountability, and decision-making.
• As the industry matures from something that looks and feels like an R&D stage to an increasingly commercial stage, competition will heat up and look a bit more like it does for traditional companies. Projects will compete on vectors like cost, product offering, and distribution; some projects will vertically integrate while others go horizontal.

Joey Krug, Pantera Capital
We’ll see $100k BTC, $2k ETH, and a Coinbase IPO. Black swan perhaps one of the Grayscale products trades at a discount in 2nd half of 2021, but that’s a much smaller chance than the first three.

Alex Adelman, Lolli
Several publicly traded companies, including Tesla, will add bitcoin to their balance sheet. Decentralization of workforces, protocols, and companies will continue. Central banks print even more money in response to Covid. Second layer protocols and organizations will make spending, buying, and earning bitcoin easier than ever, which will further aid bitcoin’s path to mass adoption.

Alexander Svanevik, Nansen
2021 is the year DeFi meets fintech. Crypto companies like Circle, Wyre, and Multis will build bridges from DeFi to legacy finance via fiat integrations. And from the other side, companies like Revolut and Paypal will start dabbling with DeFi savings products and stablecoins. Crypto purists on Twitter will lament these centralized parties getting involved, but most of us will accept that it’s the best way forward to increase adoption of crypto and DeFi.

Qiao Wang, DeFi Alliance
As CBDCs and stablecoins around the world begin to flourish, foreign exchange will be the most under-discussed yet the most contested battleground in DeFi. We will at point experience an “NFT summer” similar to the DeFi summer of 2020, as the line between the two continues to blur. This will be the final parabolic cycle for BTC, as BTC climbs a wall of (regulatory) worry to the one trillion dollar mark and institutional participation begins to mute volatility and momentum.

Kinjal Shah, Blockchain Capital

• The crypto industry will have a record year of consolidation as the M&A market heats up and fintech / banks scoop up crypto companies.
• The industry will see its first true social consumer application take off with a non-crypto audience.
• With Libra launching, we’ll see another announcement of a fiat-backed stablecoin from a tech player. There will be extreme regulatory focus / pressure on stablecoin issuance and surveillance.

Nic Carter, Castle Island Ventures

• An episode of crypto-dollarization is acknowledged as playing a significant role in the collapse of a sovereign currency (which is not the Venezuelan Bolivar).
• A major stablecoin (>$1b free float) suffers a bank run and trades under 90c/dollar for an extended period of time (at least a month).
• Investors start to question the qualities of ‘governance tokens’ and begin to demand more explicitly codified tokenholder rights.
• The total supply of stablecoins exceeds $50b.
• At least a half-dozen exchanges or custodians worldwide institute regular proof of reserve protocols.

Simon Chamorro, Valiu
I think next year (like most) will be the year of DeFi. It will be a huge responsibility as this entrepreneurs, developers and companies will start to define the future of finance and will have to stick to their values. The reason I believe we all got into crypto; a more open, sovereign and effective financial infrastructure. Specially with large powers entering the race like Diem (libra), China and others. We will see the real face of many in the crypto sphere. I do hope we start to see interoperability within Bitcoin, Ethereum, Stellar, Algorand, Polkadot and the likes. It will serve many.

Tomiwa Lasebikan, BuyCoins

• African markets will bootstrap faster adoption of Lightning Network. A lot of micro transaction remittances are going to develop on the lightning network.
• A lot of inflow into USD-denominated Stablecoins as lot more people discover it as a way to hedge against local currency devaluation especially in the face of potential covid-driven recession in various developing economies.
• Clearer regulation — 2020 has seen massive growth and adoption. Governments will start reacting by providing a lot more framework for thinking about crypto.
• There will be at least a momentary market cap flippening between a smart contract-focused blockchain and ethereum. Ethereum will suffer some punishment for its slow development over the years as its blockchain gets even more congested.

Marc Bhargava, Coinbase
A closer overlap between crypto and the creator economy. Blockchain being used as a tool and the crypto community as early adopters for new and existing social platforms.

Elena Nadolinski, Iron Fish
Privacy, privacy, privacy.

Ian Lee, IDEO CoLab Ventures
Next year, DeFi will enable higher order services, products, and experiences in areas that are DeFi adjacent like commerce, social media, social networks, and gaming. We will also see the beginnings of the next big breakout area of crypto: Crypto Social, that enables open social graphs. Value will start to move higher up the stack to the product, experience, and app layers — user centered design and UX will become not just important, but even more crucial to a crypto project’s success.

Yele Bademosi, Bundle Africa
By the end of 2021, most African fintechs will act as on-ramps for crypto and most crypto-native companies will offer more traditional fintech features leading to a tremendous increase in the number of African crypto users.

Colleen Sullivan, CMT Digital
2021 will be the year of the regulator. The “midnight rulemaking” from Treasury is a shot across the bow of more to come. The foundation that Satoshi Nakamoto gave us has the power to democratize money itself, and as decentralized systems scale, fear is a fast follower. While the crypto industry currently has tremendous momentum behind it, these systems are not safe yet and they need our continued efforts to protect them.

Yes, of course we all agree that the Bitcoin system cannot be “shut down,” but if we want crypto more broadly to reach its true potential and make a difference in billions of lives, then we need to work with regulators and policy makers so it can do just that. Fortunately, through the countless hours we have spent working with regulators and policy makers, many are not afraid; they have engaged with the industry in meaningful ways and they understand the potential of the technology we are building. That said, the amount of regulatory and policy engagement we need to do in 2021 could easily rival the aggregate of our work in all years prior. We are rolling up our sleeves and welcoming the opportunity to spend time ensuring that these important constituents understand the true benefits that decentralization and crypto bring to global economies and, most importantly, to all individuals.

Su Zhu, Three Arrows Capital
Several central banks will announce substantial stakes in BTC. Most investment banks and private banks will announce crypto offerings. DeFi TVL will pierce through $100B. Coinbase IPO will trigger a frenzy of M&A. Several large public companies will issue BTC-related capital structure instruments. Bitcoin dominance to go significantly higher. Options markets volume to become over 50% of all crypto derivatives markets. Island nation formed with crypto as the main currency.

Val Wallace, Square Crypto
More exchange Lightning uptake, mature anchor outputs across implementations, multiple new UX candidates and improvements for managing one’s own keys, lots of progress on external signers for lightning “warm” wallets.

Jason Lau, OKCoin
Bitcoin institutional adoption will really pick up steam, dominate the news cycle, and drive prices higher. 2H 2020 was just a taste of what’s to come. Also, expect to see M&A deals as traditional players acquire the talent and infrastructure required to participate.

Meanwhile, Lightning will have a breakout year; ETH layer 2 solutions will mature and become commonplace; and I’m looking forward to at least one crypto-integrated game (and subsequent NFTs) becoming mainstream.

Clinton Bembry Jr., Slingshot

• EIP 1559 will be live by end of 2021.
• Total DEX trading volume in 2021 will break $1T.

Casey Caruso, Bessemer Venture Partners

• Bitcoin will remain the top SOV coin.
• Stablecoins will continue to own payments and their spot in trading.
• % of Bitcoin held by institutions (hedge funds, etc.) will double.
• Many layer 1s will die.
• Most tokens will continue to lose steam.

Sam Bankman-Fried, FTX
If institutional adoption of crypto keeps increasing, the west will increasingly focus on large adoption. Projects, tokens, and exchanges will be judged based on upside growth potential more so than current usage and excitement among industry insiders. This could further highlight the difference between hemispheres with other countries continuing to focus on products with current adoption in the industry.

Eva Beylin, The Graph
2021 will be the year of decentralizing the stack. The critical protocols for decentralized APIs, oracles and storage are near production ready to support current Ethereum usage. Soon it will seem foolish and unsafe to run a dApp on centralized infrastructure.

Joshua Rivera, Blockchain Capital
The premiums to retail purchasers of traded digital asset fund products like Grayscale’s GBTC and Bitwise’s BITW will become so exorbitant that the SEC will finally recognize the incongruence to retail investors and approve a Bitcoin ETF.

Stephen McKeon, Collab+Currency

• Governance mining becomes a thing, giving rise to governance as a service
• Increased regulatory headwinds, particularly for DeFi
• First breakout at the intersection of crypto and gaming
• Explosion of use cases for NFTs
• Stretch goal: @jack embraces Ethereum

Alexander Angel, Primitive
In 2021 there will be a layer 1 protocol with a fully diluted market cap of $100B.

Imran Khan, Volt Capital
With recent regulatory hurdles in the US, we’ll see two worlds emerge in DeFi. The “US first world” will be semi-regulated offerings that align with regulations but are slow to adopt new technologies. Meanwhile, the “Asia first world” will be untethered from regulation and free to spearhead new DeFi concepts and primitives.

Alexander Leishman, River Financial
The dominant trend of 2021 will continue to be Bitcoin becoming an increasingly attractive place to park wealth and use as collateral. Broader financial services on top of Bitcoin will begin to emerge as financial institutions slowly realize that money as we know it is fundamentally changing.

Larry Cermak, The Block
Market structure continues to mature with options having another big year and Binance finally launches an options offering that will directly compete against Deribit. PayPal launches a stablecoin on Ethereum and stablecoins start finding a product-market fit in areas outside of trading. Non-custodial derivatives take off due to Optimism and capture 10% of CEX’s open interest by year-end. Coinbase market cap is above $80 billion at one point, which leads to the repricing of other pure crypto play companies. M&A starts heating up with traditional companies targeting profit-generating crypto companies. FATF crypto guidance starts getting implemented, which will put pressure on jurisdiction-less crypto-to-crypto exchanges.

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