The total value of the DeFi market has jumped by 2,000% in just twelve months, but compared to the total market capitalization of all cryptocurrencies, DeFi accounts for less than 2%. This means that there is plenty of room for growth and in 2021, DeFi could take off if the authorities do not impose any restrictions or attack the growing number of stablecoins.
It is possible that the total value locked in the DeFi space will surpass $100 billion, as there will be greater integration of crypto-tools in the financial industry, and related technologies into the real economy. To move to the next level of global acceptance, cryptocurrencies need full legalization in key economies and this process will continue in 2021, as the market will remain attractive for institutional and private investors.
The signs of growing adoption are there as central banks will be soon launching a large number of pilot projects to implement CBDC (Central Bank digital currency) instruments, and large corporations will start testing their own stablecoins. But risks remain as a correction of Bitcoin to around $20 thousand or even up to $15 thousand in some negative scenarios could mean a disruption of all those plans.
An important factor to remember when making predictions is that the crypto market is largely based on speculation, making it difficult to project its development far into the future. Many analysts are saying that at the beginning of 2021, the cryptocurrency market may face a 25-30% decline. But it is important to highlight several important trends that will become the main drivers of the growth of BTC and the altcoins as the year continues.
The key and most important factor influencing growth is the influx of companies from the S&P 500 list to the crypto market. Several large purchases of Bitcoin were already marked last year, which led to fluctuations in the exchange rate of the king of crypto. Given that Bitcoin is the most profitable investment instrument to date, the capitalization of the cryptocurrency market will continue to increase.
The growth of the DeFi ecosystem is another major factor, as the industry has surpassed $270 billion in transaction volume and is showing no signs of abating. In fact, it is the DeFi sector that is fueling interest in stablecoins and assets capable of providing passive income generation through yield farming.
Assets like the Wrapped ILCOIN (WILC) stablecoin presented by the ILCOIN Development team for stimulating the development of new technological breakthroughs for the blockchain and DeFi industries. WILC is part of the unique ILCOIN technology supported by the fastest available RIFT Protocol second layer solution powering the DCB smart contract system designed for storing large amounts of data in a decentralized manner. WILC is in league with the rest of the DeFi market as a yield farming instrument traded at a 1:1 ratio with the native ILCOIN at around 1 USD per coin.
While most are looking at capitalization rates, some players in the DeFi space are using the current potential of cryptocurrencies for powering development and bringing new technologies to the forefront. It is quite possible that if a recession does hit, those with tangible, technological assets on their hands will end up the real winners and may continue the fight for the adoption of cryptocurrencies worldwide as means of payment with new, more advanced tools at their disposal.