Bitcoin will ultimately be a “great investment in 2H2020 as a flood of new investors flock into the space, and there just won’t be enough BTC offered to satisfy this new demand,” predicts Jeff Dorman, CIO at Arca.
In 2020, crypto investment management Arca predicted that thematic investing will drive crypto performance in rewards, structured tokens, staking, and DeFi which did happen in the first half of the turbulent year.
They predict that DeFi will “stay hot” in the remainder of the year but this also means the return will “cool down.”
While doing a post mortem of their 2020 predictions, Dorman shared that growth in Fan Engagement tokens is just getting started. Also, as we saw “no-coiners” getting pushed into the digital asset realm for various reasons viz. generational theft, data privacy, digitizing everything, nowhere else to turn, and distrust of financial institutions by millennials, they will continue to do so.
Bitcoin, an alternative to fiat, offers a hedge against the potential financial system collapse as such it will be a “logical choice” as people continue to see a return on capital, which is one of the latest predictions by Arca for the remainder of 2020.
“Bitcoin will remain the best insurance policy against currency collapse, even if many other coins enter the market or central banks launched their very own.”
This is because a recession is coming if it isn’t already here. But for equities, there are a lot more reasons to suffer.
As we saw in 2020, corporations don’t really have saved for rainy days and now they are also forced to consider “‘increasing societal value’ over ‘increasing shareholder value.’” Forced by societal pressures to enhance their communities and constituents, this will lead to “greater digital asset adoption,” Dorman said.
The coronavirus pandemic has already moved people further away from cash to contactless payment solutions. This was what has also been propelling central banks to accelerate their plans for state-backed digital currencies with China now much closer to the release as it uses the ride-hailing company, Didi, for the trial.
Even in the crypt space, Arca sees the rise of non-fungible tokens which are individually unique. By offering a way to create digitally verifiable ownership of assets like art, property, and collectibles, NFTs open up the ability to utilize these assets across platforms, he said.
“Creating a circular economy for legacy assets, as well as new assets, will be the next step towards the exchange of scarce assets.”
Already happening in the gaming industry, the sector is expected to “heat up” in the remainder of 2020 “as decentralized finance continues to gain steam and scarcity is becoming more attractive to the individual,” he said.