[Analysis] What were the four predictions for 2020, and how does Blockchain Capital foresee 2021?

Blockchain Capital is a cryptocurrency venture capital firm based in California, USA, founded in 2013. Its most notable co-founder is Brock Pierce, a former child star who ran for the 2020 U.S. presidential election and also serves on the board of the Bitcoin Foundation. Blockchain Capital has invested in over 95 cryptocurrency-related companies, including prominent ones like AAVE, BitGO, Coinbase, and Libra.

In December 2019, Blockchain Capital released its trend predictions for 2020, hitting on four out of the eleven predictions. In December 2020, Blockchain Capital once again presented its forecasts for 2021. Let's take a look:

Review of 2019 Predictions

2019 Blockchain Capital Predictions:

1. Cryptocurrency companies will be acquired for over $500 million X
2. DeFi total locked value exceeds $5 billion O
3. Libra will launch its stablecoin anchored to the U.S. dollar successfully despite competition from China X
4. A federal judge will dismiss the SEC's lawsuit in a cryptocurrency case X
5. No base layer chain launched in 2020 will reach the top ten X
6. USDC will see over 300% growth in trading value, circulation, market cap, and trading volume O
7. Bitcoin transaction fees reaching $100 due to high demand catalyzing scalability X
8. FinCEN and FATF will hold stablecoins to stricter standards than cash, and will more broadly require compliance with the travel rule O
9. KYC/AML becomes a major regulatory challenge for DeFi X
10. Privacy coins delisted from major exchanges X
11. Bitcoin breaks historical highs O

Starting with the unsuccessful predictions, the acquisition exceeding $500 million was close to the rumored $400 million according to CoinMarketCap. As for Libra, now renamed Diem, it did not undergo changes in 2020 due to China's digital currency DCEP; it is still awaiting approval from the Swiss Financial Market Supervisory Authority for a payment license.

The fourth prediction about the SEC saw strong regulatory actions in 2020, including Telegram abandoning the TON blockchain project, suing John McAfee for illegal ICOs, and a significant lawsuit against Ripple Labs at the end of the year.

The fifth prediction that no base layer chain launched in 2020 would enter the top ten market caps missed the mark as Polkadot went live this year and quickly entered the top ten.

The seventh prediction about Bitcoin transaction fees did not surge, instead, it was Ethereum that faced unfriendly Gas Fees due to the DeFi boom.

The ninth prediction regarding KYC/AML regulations in 2020 still focused on regulating virtual asset service providers (VASPs) and proposed extending the travel rule to non-custodial wallets, without significantly impacting the DeFi ecosystem.

The tenth prediction that privacy coins like Monero, Zcash, Dash would be delisted did not occur in 2020.

Blockchain Capital was correct about the hotspots of 2020: DeFi and Bitcoin.

The second prediction that DeFi would reach $5 billion in total locked value actually peaked at $14 billion, nearing $13.3 billion at the time of writing.

The eleventh prediction, Bitcoin significantly breaking historical highs by the year-end.

The sixth prediction about USDC, starting from a nearly $500 million market cap at the end of 2019, skyrocketed to $3.6 billion currently, over a 700% increase, surpassing Blockchain Capital's prediction. The eighth prediction was entirely accurate; the travel rule's scope has been more widely applied in the crypto industry.

2021 New Predictions: Governance Tokens Will See Astonishing Growth

In mid-December, Blockchain Capital released new predictions for readers to consider:

1. Coinbase successfully IPOs with a market cap exceeding $300 billion
2. The crypto industry will witness two acquisitions exceeding $500 million
3. The issuance of stablecoins pegged to the U.S. dollar - Tether, USDC, Libra - will surpass $150 billion
4. The total market value of the top three DeFi governance tokens will reach 33%~66% of ETH
5. Lending in DeFi protocols will increase tenfold, surpassing $30 billion
6. 33% of cryptocurrency spot trading volume will come from decentralized exchanges (DEX)
7. WeChat Pay and Alipay will support China's central bank digital currency (CBDC)
8. The U.S. SEC will approve the first Bitcoin ETF and the first custodial digital asset broker
9. Bitcoin's market cap will grow to 4%~10% of the gold market cap
10. Microstrategy will rename to Macrostrategy

The first prediction, Coinbase's IPO, is almost certain to happen, but whether its market cap will reach $300 billion remains to be seen, equivalent to Tencent's U.S. stock market value. The seventh prediction, already in the plans of the Chinese central bank, should not be difficult to achieve.

Of particular interest is the fourth prediction that the total market value of DeFi governance tokens will reach 33%~66% of the market cap of Ethereum. At the time of writing, Ethereum's market cap is $83.4 billion, while the total market value of the three major DeFi governance tokens SNX, AAVE, UNI is $2.9 billion, $1.1 billion, and $800 million, respectively. If it reaches three to six times the market cap of Ethereum, it will be between $27.5 billion and $55 billion, a growth of at least nine times.

There are optimistic predictions about Bitcoin replacing gold's position; the ninth prediction suggests that Bitcoin's market cap will reach 4%~10% of the gold market cap, calculated at $9 trillion. This implies a market cap for Bitcoin of $360 billion to $900 billion, which is close to the current market cap of nearly $500 billion and is achievable.

Whether the other predictions will come true remains subject to the overall environment changes next year!