It’s going to be volatile but institutional support for bitcoin will grow, says crypto exchange Luno.

The big crypto trends to look out for in 2021 are more volatility, tougher regulatory oversight and continued support from big institutional investors, says Luno in a recent newsletter to clients.

“2020 was a proper stress test with bitcoin hitting a low of around $5 000 in March and a high of $28 000. The new year is following the same trend with the price already reaching the $40 000 [R607 100] level,” says Marius Reitz, Luno’s general manager for Africa.

It was also the year institutional investors started backing bitcoin in a big way, with MicroStrategy, Mode, Square and others moving some of their cash reserves into the crypto as a hedge against the inflationary potential of fiat currency.“Corporations, institutional investors, family offices, and hedge funds all want bitcoin to diversify their portfolios. While the numbers are small relative to traditional markets, institutional investment will continue to grow as the economic implications of Covid-19 become clearer,” says Luno.

Despite the extraordinary 300%-plus gain in bitcoin’s price over the last year, mainstream adoption will grow in 2021. Major crypto players are increasing their investment and interest in cryptocurrencies. The retail market is also on fire on the back of booming crypto assets, greater media attention and easy access to cryptos

With each bull run, more investors enter the market for speculative purposes. This grows the user base and brings cryptos closer to the critical mass needed for more widespread adoption of cryptos for payments and other use cases.

A recent survey by Luno revealed that while a single global currency is not yet seen as valuable by respondents in Europe and Asia, Africans are ready to embrace a global currency. More than half of the respondents in Africa believe that a global currency would improve the current financial system.