January on Pace to Break More Crypto Records

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In Brief
  • Decentralized exchange volumes are on track to smash old records.

  • The number of new bitcoin holders appears to be rising.

  • The crypto market cap is hovering above $1 trillion.

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While the bull-run of late 2020 was in full swing, January 2021 looks to break those records. Could this be the start of the most intense year for crypto and Bitcoin yet?

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The year 2020 certainly wasn’t a bad year for crypto. Traders had wonderful entry points in March, and almost as appetizing exit points in December, as Bitcoin swung from $4,000 to $40,000. But January 2021 might fulfill the dreams of cryptolovers by breaking more new records.

Decentralized finance volume

While prices are always a useful metric, the volume of trades are important, and can show which way the markets are heading. Decentralized Finance became perhaps THE buzzword of 2020 crypto, but it is showing no signs of slowing down.

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Led by Uniswap, decentralized exchanges allow for anonymous trading where almost anyone can provide liquidity for almost any token. According to Messari Research, DEXs are on track to reach $56.9 billion in trade volume in January 2021. The previous record was $26.7 billion in September 2020.

While Uniswap sparked the DeFi craze of late 2020, other protocols are picking up steam. Synthetix offers layer-2 solutions for Ethereum, and MakerDAO, creators of the DAI stablecoin, are not doing too poorly, either.

Meanwhile, some swap protocols of once great potential like Kyber see relatively small volumes.

Then again, one of these less-popular swap protocols could come out with a killer Layer-2 solution for ETH, greatly reducing fees and transaction times. A frontrunner in Layer-2, especially one supported by a free token, could kickstart another craze.

New bitcoin holders increase

While DeFi and the world of ethereum (ETH) is sucking up the attention of traders, bitcoin (BTC)  itself is not doing too shabby. Despite a couple of drops from all-time-highs which almost reached over $40,000 (and who could have predicted that?), Bitcoin still has good metrics.

At this point, investment from institutions is a given, though whether that is priced in or whether institutions will wait for a big dip to buy is another question.

Research from Chainalysis via blogger fklivestolearn shows some pretty exciting data when it comes to how long hodlers have been hodling. Wallets of long term holders are increasing in value, as are wallets that have been held less than one month.

Blogger fklivestolearn believes that these numbers, which almost reach the level of the 2017 hyped bull-run to $20,000, suggest new buyers are still coming into the market. As main-stream media awakes from winter break to cover Bitcoin, this number could reach record levels. That would mean more new BTC buyers than ever before, and therefore higher prices.

A bitcoin winter’s tale

While the rocketing of BTC’s price has slowed for the moment, fundamentals still look good. Indeed, the market cap of Bitcoin (BTC) is sitting comfortably around $700 billion as of the time this article was written. 

Bitcoin and Decentralized Exchanges both may see record levels by the end of 2021. Both of these seem like a realization of the dream of country-less, decentralized currency and markets. Records are good, but in crypto, it always came with volatility.

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Harry Leeds is a writer, editor, and journalist who spent much time in the former USSR covering food, cryptocurrencies, and healthcare. He also translates poetry and edits the literary magazine mumbermag.me.

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