Last week our theme was “Coinbase IPO… waiting for the bull”
Our theme for this week is “Bitcoin: A Year in Review… 2019 will be decisive for Bitcoin and Cryptocurrencies“
To say that we’re in the midst of change and uncertainty is an understatement. 2018 has been a tough year for cryptocurrencies. This year left a blood trail for cryptocurrency investors. Bitcoin’s value dropped from $19,352 on December 17th, 2017, to $3,862.80 on December 31st, 2018. Ethereum fell from $1,405 on January 10th to $139.83 on December 31st. Other cryptos, like Bitcoin Cash and Ripple, also had big drops in value.
As this year comes to a close, the world of Bitcoin and cryptocurrencies looks fragile, volatile, and chaotic.
We tend to look at numbers as a way of quantifying progress and measuring growth. But looking only at the price of Bitcoin and other cryptocurrencies is a negative and depressing way to measure market growth. It certainly does not give us the entire picture. Progress goes beyond plain numbers and IMHO the reality is completely different.
While the cryptocurrency market has lost 85% of its value in 2018, the number of new users has been growing. Cryptocurrency adoption nearly doubled in 2018, despite the bear market. At the end of 2017, there were 18 million users in the cryptocurrency ecosystem, now there are 35 million users, a 94% increase this year alone.
A new study published by the Cambridge Centre for Alternative Finance paints a completely different picture:
- The total number of users exceeds 139 million, with at least 35 million that have verified their identities.
- Service providers are pro-actively adopting measures to comply with regulation, even though they are not explicitly subject to regulations. With 37% maintaining an in-house compliance team and more than half performing KYC/AML checks, these self-regulatory efforts show growing market maturity.
- The cryptocurrency ecosystem is becoming more connected to traditional finance. Fiat-to-crypto trades are allowed on some exchanges, bank wires dominate both deposits and withdrawals, while many exchanges support a greater number of deposit options than withdrawal options, with 69% maintaining relationships with established traditional payment networks.
While big players are not here yet, they are coming. There are still some missing pieces that are holding them back, especially when it comes to an institutional-grade custodial solution for Bitcoin. But, CME Bitcoin futures average daily volume has been rising all year, almost tripling between the first and third quarter this year. Fidelity’s move into the crypto space with its institutionally focused crypto custody solution is reigniting hope for many.
In January we should see the launch of Bakkt, a cryptocurrency market, backed by the Intercontinental Exchange, Microsoft, and Starbucks. While the launch has been delayed until Jan 24th, 2019, it is widely anticipated and will be a catalyst for major cash inflows to crypto. This December, Facebook finally announced that rumors were true and it was moving into the crypto space with a new stablecoin project.
These are just a few of positive developments, still a lot can go wrong.
All year long, there have been numerous crackdowns throughout the world specifically on ICOs. 2018 marked the beginning of big troubles for Initial Coin Offerings, with regulators like the U.S. Securities Exchange Commission cracking down on ICOs. The SEC nailed a couple crypto projects in the last quarter of this year. It seems that every ICO is at potential risk, and it is likely that most ICOs have performed unregistered securities offerings. But for some with good reason, like Cloud With Me, Tezos, Latium Network and Bitconnect, which was an outright scam. While the term “Ponzi scheme” gets thrown around a lot on the crypto industry, for the most part it is completely unfounded.
Yet, we could see big changes when it comes to ICOs in 2019. As the SEC considers most cryptocurrencies securities, many believe that security tokens will be the next big gold rush. And they have good reason to think so, as tokenized stocks will be backed up by a tangible asset, such as the company’s shares or profits.
Will Bitcoin rise in 2019?
I believe that blockchain and cryptocurrencies are the future. I believe the price of Bitcoin and other cryptocurrencies will go up this year. But this is only a guess. Investors are still recouping from the losses of 2018’s bear cycle. While Bitcoin has certainly become a mainstream financial instrument, revolutionizing how we think about money, it continues to surprise us with its unstable behavior.
With prices low, the threshold to enter the market is favorable. In a declining market, you can invest in promising alt-coins which should soon release their completed products, and ensure market growth for the future.
Bitcoin has experienced quite the journey since Satoshi Nakamoto published its white paper in 2008 and a lot of things are changing on a global level. A number of jurisdictions have provided more regulatory clarity and I expect this to continue in 2019. This will give even more comfort to retail and institutional investors and help the market grow in 2019, despite the price tumble we saw in 2018. Without a doubt, the coming year is going to be a decisive one for Bitcoin & cryptocurrencies and their long-term future.
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