Thinking of investing in crypto but don't know where to start? It can be a very scary world if you're unsure where to go or what to do with your hard-earned cash.
It's no secret the cryptocurrency world is growing quickly, with the total market capitalisation of all cryptocurrencies now exceeding $2.2 trillion.
Did you know it's estimated there are around 100 million crypto users worldwide at the moment? Many have jumped on the bandwagon and many more will.
Here are the biggest trends happening right now in the crypto space. These trends are expected to continue through to 2025 and beyond.
1. More interest and buying of NFTs
One of the most interesting developments in the crypto space is the rise of non-fungible tokens (NFTs).
Nigel Green, the CEO of financial advisory organisation deVere, said the (NFT) market would see a massive increase in trading volume over the next 12 months, and beyond that.
Green said the NFT market hit new highs in the second quarter of 2021, with US$2.5 billion ($3.4 billion) in sales so far this year. “This is almost 20 times more than the $13.7 million in the first half of 2020,” he said.
“With soaring interest from major investors like payments giant Visa, who understand and value that the future of almost everything is geared towards digital, demand is set to explode."
Not sure what an NFT is? An NFT is a unique digital file.
You can copy a digital file as many times as you want, including the art that's included with an NFT. NFTs are designed to give you something that can't be copied: ownership of the work (though the artist can still retain the copyright and reproduction rights, just like with physical artwork).
It is worth doing some of your own research into NFTs and seeing what are some to consider purchasing within your budget range, as they will increase in value over the next five years.
2. The rise of altcoins
The pseudonymous trader known as Altcoin Sherpa has told his 130,200 followers on Twitter that the recent price surge in smart contract platform Terra (LUNA) has him convinced that Solana will break out sooner than he had expected.
Not sure what an altcoin is? An altcoin is a cryptocurrency alternative to Bitcoin. Since Bitcoin is widely regarded as the first of its kind, new cryptocurrencies are viewed as alternative coins — or altcoins.
Let’s dive into a few of the altcoins retail investors have their eye on right now. These are seven of the top cryptocurrencies to buy that may outperform (outrun) during what could be a legendary time in the altcoin world:
Binance Coin (CCC:BNB-USD)
The beauty of altcoins is that they're majorly cheaper than the other big coins, so you can buy more.
Always remember to do your research.
3. More regulation in the crypto space
Yes, we have to talk about it. 2021 has been the year of increasing regulatory clarity in the crypto market. And legal questions over the nature of cryptocurrencies themselves have continued to confound regulators.
The whole point of crypto is that it is non-government regulated and therefore untrackable. But this could change.
Let’s talk about the Ripple case: In late 2020, the Securities and Exchange Commission (SEC) brought a case against Ripple Labs, alleging the company offered approximately $1.3 billion in unregistered securities when it sold much of its XRP cryptocurrency to the public. Ripple Labs has been under SEC investigation for almost a year, putting their XRP coin in jeopardy. This hasn't stopped anyone buying XRP though, just slowed it down.
This raises questions about certain parts of the crypto market. And it is still unclear what's considered a security and commodity in the digital world.
Keep your eye on this space, and read the finance news section daily.
4. The market for DApps expands, and will continue to grow
You might be asking, "what on earth is a DApps?" It is a decentralised application; a software application that runs on a distributed peer-to-peer network.
The potential market for decentralised applications is huge.
DAppRadar estimated total DApp transaction volume increased to $271 billion in 2020 (up from $21 billion in 2019.)
Many DApps run on the Ethereum blockchain and perform some kind of DeFi functionality.
Recent estimates indicated roughly 2,000 DApps were operating on the Ethereum blockchain.
5. The rise of the stablecoin (ANOTHER coin?)
Yep, 80 per cent of this market is made up of Tether. Not sure what Tether is?
Tether (USDT) is a blockchain-based cryptocurrency whose tokens in circulation are backed by an equivalent amount of US dollars.
Stablecoins track traditional fiat currencies, like the dollar, the euro, or the Japanese yen, which are held in a designated bank account.
FAST FACT: Searches for Tether have increased by 1,400 per cent in five years.
The total market value of stablecoins was estimated to have grown by 500 per cent last year, to $23 billion. Eighty per cent of this market is made up of Tether, but this doesn't mean growth cannot come from other places.
Many times, stablecoins are used in DeFi applications because of their relative price stability.
If you're looking for a more stable coin, you've found it.
6. Institutional adoption of the crypto ecosystem
Large companies, such as Paypal are now more interested in investing in crypto.
Financial institutions and large corporations have traditionally viewed the cryptocurrency ecosystem with suspicion. But this has changed.
Today, many institutions are doing everything they can to allocate capital to this area. By the end of 2020, $15 billion of institutional assets under management had been allocated to the crypto asset class.
Let's use Paypal as an example: Paypal and its subsidiary, Venmo, both enabled crypto trading on their platforms last year.
FAST FACT: PayPal data showed that users who bought crypto on the Paypal app logged in twice as much as they did before Paypal allowed such transactions.
7. Lastly, let's delve into DeFi
Almost nothing has drawn more attention to the crypto community this year than the rise of DeFi (decentralised finance) applications.
What is DeFi? Decentralised finance is an umbrella term for a variety of financial applications in cryptocurrency or blockchain geared toward disrupting financial intermediaries.
FAST FACT: Search interest in decentralised finance has risen by 8,900 per cent since 2017.
Put simply, the method uses traditional financial transactions that take place on the blockchain.
These transactions are typically enabled by the use of smart contracts.
Unlike traditional payments or transfers, they avoid the need for financial intermediaries altogether.
DeFi transactions usually range from traditional lending to the creation of derivatives.
Growth in the DeFi space is only just beginning.
FAST FACT: DeFi Pulse reports that the Total Value Locked (TVL) – a measure of the total value of cryptocurrencies that are committed to a smart DeFi contract – grew from $2 billion to $15 billion in 2020.
For everything DeFi, check out Elbaite, which is Australia's safest cryptocurrency exchange.
Best Australian Exchanges
There are a lot of options when it comes to Australian cryptocurrency exchanges, and according to Coinformant, these are the best:
Swyftx – best crypto exchange in Australia ($10 BTC sign-up bonus)
Binance – best cryptocurrency trading platform for advanced users
Coinspot – well-known Australian cryptocurrency exchange
Digital Surge – new Australian crypto platform
CoinJar – oldest Australian crypto exchange
Independent Reserve – great Australian exchange for OTC purchases
Coinbase – biggest international crypto exchange for beginners
Coinmama – international crypto broker with great payment options
eToro – best for CFD crypto trading
Kraken – best secure international exchange
The cryptocurrency market is quite unpredictable, much like the stock market. This is not only due to innovations like NFTs, but also due to general market volatility with mainstream coins like Polkadot and Litecoin, along with many altcoins like Dogecoin.
You can be certain, however, that innovation in this space will continue and there’s no telling how much it will grow over the next decade.
Crypto was designed for the everyday user, but it can be quite complicated, hence the recommendation to DYOR (do your own research).