2018 is nearly finished and investors are cautiously optimistic about crypto’s prospects in 2019. While it’s great to think positive, what will it really take to turn the market around in 2019?
2018 was a Nightmare
As the end of 2018 approaches, there will be a steady barrage of articles writing 2018 off as a fluke correction year for crypto. Readers can also expect to be bombarded with proclamations that all cryptocurrencies have bottomed and 2019 will bring a bull run the likes of which the world has never seen.
With that said, 2018 was a rough year and the crypto-bear definitely roamed free and caused an unforeseeable amount of havoc. All criticism aside, 2019 should be a better year than 2018. Honestly, how could it get any worse?
Let’s take a look at what factors and new developments could help the crypto-market turn around next year.
Liquidity, Demand and Volume
Diminishing volume has been a recurring theme all throughout 2018 and a quick glance at a chart for Bitcoin or nearly any other cryptocurrency shows that repeated fake out rallies, dead cat bounces, bull traps and a continuous pattern of lower highs were clear signals that the market would continue trending down but hindsight is 20/20 isn’t it?
Evaporating demand for cryptocurrencies translated to free falling prices and sharp corrections that repeatedly pulled the market below crucial supports.
The launch of Bakkt’s Bitcoin futures exchange could assist with the demand, liquidity and volume of Bitcoin and there are rumors that the platform operators are considering adding other digital-assets.
As has been discussed throughout the year, institutional grade investment platforms provide an on digital assets ramp for hedge funds, institutional investors, family offices and other larger firms to access the crypto-market in a secure, regulated manner.
To ETF or Not to EFT?
Every month of 2018 was spent pondering whether or not the U.S. Securities and Exchange Commission (SEC) would approve a Bitcoin-based exchange-traded fund. For a time, it seemed that the entire lifeforce and future success of the crypto-market was reliant on the result of this decision and with each postponement and hint of denial the market steadily stepped down another leg.
At this point, it’s safe to say that most retail investors just want to scream out “Just get it over with already.” In other words, either deny or approve the damn thing so the market can react, accept and move on. Obviously, in the event of an approval, demand permitting, the market could experience an uptick in liquidity, demand, and volume.
Even if 2017’s bull rally was the product of a manipulative fluke, it is clear that main street investors appetite for creating a quick buck fueled a parabolic rally that will be the talk of ages.
While cognition is one of the key features that separates man from beast, a good rally and the chance to turn a quick profit is too hard for many a man to resist and if demand and investment from financial giants generate a trend change in the crypto-market, mainstream investors are bound to pile in.
Whether it be parabolic frenzy or purchasing and advertisements from brokers and institutions, higher volume is required.
A New Year of Bullish Bets on CME & CBOE Futures
With Bitcoin shorted to nearly $3,000, Morgan Creek Digital’s Anthony Pompliano and other analysts are still suggesting the digital asset has further to fall. A possible silver lining to the whole situation is with the turn of a new year and Bitcoin price 00 so low, perhaps BTC bets on the CME and CBOE futures will turn bullish.
Analysts have correlated Bitcoin’s precipitous decline with the debut of Bitcoin futures and it seems that their approval and roll out came too late into Bitcoin’s 2017 rally to provide any benefit.
Hopefully, 2019 will reverse this trend as at some point if this trend does not reverse, there’s nowhere to go but up.
At the moment, SEC commissioner Hester Peirce, who many crypto-investors look to as a friend of crypto and affectionately refer to as Crypto-Mom pledges that she will continue to fight for crypto but also cautions, “Don’t hold your breath.
I do caution people to not live or die on when a crypto or Bitcoin ETF gets approved. You all know that I am working on trying to convince my colleagues to have a bit more of an open mind when it comes to [crypto].
– Hester Peirce
Meanwhile, SEC Chairman Jay Clayton resolutely stands by his previous statement that a crypto-ETF is a no until manipulation no longer poses a threat. Clayton has repeatedly said,
I want to see better market surveillance and custody for digital currencies before being comfortable with a crypto ETF.
– Jay Clayton
One thing to look forward to in 2019 is the growth of genuine use cases as the market grows more dynamic and diversified. Investors would do well to redirect their focus from the oft disappointing discussion of Bitcoin ETFs and bull markets to growth opportunities within the expanding sections of the crypto market
Genuine Use Cases
2019 should see an expansion of the crypto payments sector and announcements like last week’s news about a partnership between hardware wallet manufacturer Ledger and payment startup Crypto.com are a preview of what’s to come. The sector requires more services that allow cryptocurrency holders to transact in crypto without having to first spend fiat or exit crypto to make fiat payments.
More brokers offering crypto-to-crypto payment services are needed and a growing number of companies are beginning to enter this space. Crypto holders want to spend their funds and an increasing number of businesses are looking to accept crypto.
In fact, a 2017 study from Visual Capitalist report found that the number of brick-and-mortar shops accepting cryptocurrencies grew by 30.3% and this is representative of nearly 11,300 retailers worldwide.
Even more encouraging is the forecast of the e-commerce and payments sector experiencing exponential growth by 2021. Revenue from E-commerce and mobile payment processors are predicted to rise from $528.2 billion to $885.4 billion.
2018 also saw the gradual development of new sectors in the crypto-hemisphere. In 2016 and 2017 investors earned a return on their investments through block rewards for mining and staking coins to support various networks.
As the ICO market withered in 2018, the profits from mining, masternode operation, and staking became less lucrative for many but new options for earning a return on crypto-holdings emerged.
Crypto-banking, crypto-lending, and crypto-to-crypto payments are all genius concepts that draw from the conventional business models of traditional finance but drop some of the challenges that come with traditional banking.
Stablecoins to the Rescue?
While still approached somewhat warily by investors, stablecoins offer a convenient, safe and at times lucrative (due to arbitrage) place to rest one’s funds as Bitcoin and altcoins whipsaw back and forth.
A number of stablecoins came on the market in 2018 and a currently giving Tether (USDT) a real run for the money. They might function as the saving grace to the cryptomarket as provide a regulated, stable, on-ramp for banks and businesses looking to dabble in crypto.
Also, with the ICO market in shambles, stablecoins and security token offerings could be the next assets that underpin an evolving fundraising model that traditional, blockchain and crypto-based startups need to acquire capital in 2019.
New ventures like the partnership between crypto-lender Nexo and stablecoin TrueUSD are likely to provide profitable alternatives to investors as holders can earn a return steady return on their digital assets and also acquire crypto-to-fiat loans on their crypto holdings.
Other crypto banking providers and payments companies like Nexo, FOTON Bank and Revolut are already making it easier for crypto-holders looking to acquire capital or make crypto payments quickly. The use of smart contracts and platform-specific native tokens are meant to bypass taxable conversions (crypto to fiat, crypto to crypto) and also remove the double transaction fees that those attempting to convert and spend crypto frequently encounter on exchanges.
With forecast of a ‘revolutionary force’ in 2019, investors should keep a close eye on this corner of the crypto-sector to see what other services stablecoins could provide.
In 2019, it’s going to take more than pure speculation for traders to turn a profit and each investor will have to work a little bit harder and familiarize oneself with a maturing crypto-market.
Trading wise, investors will need to stay abreast of new developments and exploit the little opportunities in order to average a respectable profit. At this point, nobody is sure what the market holds for 2019 and it’s yet to be determined if a bottom has been found yet.
In order for the oft-mentioned ‘mass adoption’ that investors and analysts speak of to occur there needs to be genuine, convenient use cases for cryptocurrency other than just investing and spending.
What do you think it will take to turn the crypto-market around in 2019? Share your thoughts in the comments below.
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