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3 Reasons Not to Give Up On Cryptocurrency In 2019

02/05/2019
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We’ve all observed the way 2018 has not been well-disposed towards crypto. There’s no need to tech-analyze altcoins; the bitcoin picture tells it all. Taking December 2017, the highest peak for BTC’s bull market as a point for comparison, we have the staggering $19,780 against $3,420 in one-year time. The situation hasn't been any better for high-promising Euthereum or Litecoin.

At this point, we can think of three categories of cryptocurrency holders: the ones who will sell low missing the possibility to wait up till the price grows up; those who will buy high when it does; and the maximalists who will firmly ‘hold’ their crypto assets, believing that someday fiat money will be replaced by virtual currency.

All things considered, we do believe that cryptomarket has got something for us in 2019. Why do we think that? Firstly, the cyclic nature of all economic phenomena and the upcoming halving of bitcoin in May 2020 that is likely to pump the demand for BTC and altcoins. We carefully studied the history of two previous halvenings and found a correlation between this event and a positive price change. Secondly, the new developments and updates schedules for virtually any token throughout all 2019. Each of these updates is targeted on the planned improvement of coin’s performance and reduction of defects. Finally, the appearance of institutional investors, which has all the chances to bring positive changes to crypto trading. Let’s get a closer look at each of these predictions.

The Cyclic Nature of Bitcoin Price Movements

There is a certain number of bitcoins that, once all mined, will be circulating in the economy, specifically 21 million coins. Miners receive a reward in the form of bitcoins for the mining. The reward, however, is decreasing with every 210,000 blocks deciphered (which takes approximately 4 years). Say, in 2009, when the first riddle was solved, the miner who signed the last one in the batch of 210,000 blocks, got 50 coins. After the first halving in 2012, the reward was cut in two and fell down to 25 bitcoins. Eight years forward brings us in 2020, and the reward of only 6.25 coins. Why BTC developers came up with such a ruthless ‘slashing’ scheme?

Since bitcoin, as well as other cryptocurrencies, aren’t backed by fiat money, they are inflation-sensitive. Taking this into account, BTC has 3 critical features incorporated in it that prevent it from devaluation:

  1. a limited number of issued coins;
  2. the increasing level of block decode complexity;
  3. halving.

Now that you know where it all comes from, let’s go back to the consequences of halvening in each year it occurred - 2012 and 2016. The first halving didn’t result in abrupt price movements, yet the dollar value gradually increased from $12 to $500 by the end of 2013, with the peack being $1,242 on November 2013. Despite constant ups and downs that followed the halvening of 2012, bitcoin manage to stabilize on the $600-$800 range and persisted in demonstrating new tops in the price rally.

A more or less similar situation could be observed after the 2016 halving: the stabilization and growth in value reaching the all-time high on December 17. Was it halvening that provoked price growth? And what about BTC losing 1/3rd of its value overnight on December 22, 2017? Crypto experts agree that two halvenings aren’t enough to see the trend, yet the facts speak for themselves.

So, does it mean we are to expect the new all-time high in BTC price after the next bitcoin halvening? Many experts express assurance on that matter since the bear market prevailing today looks like having reached its bottom. Besides, there are other positive signs setting a positive tone of BTC price discussion.

Conclusion on the Next Halvening

Considering the previous experiences, the following year’s halving won’t bring any fast and abrupt changes in price yet the gradual movement towards its increase will undoubtedly occur. It is still too early to claim that reduction of miners’ reward by half was exactly the reason that provoked the late 2013 and the late 2017 bull runs.

The Spike in Interest of Institutional Investors

Another great change to come is the long-awaited involvement of institutional investors in the cryptocurrency world. A manager of one of the ‘big four’ auditing agencies, the PwC in Hong Kong, claims that banks will prevail on the crypto market in 2019. Despite the fact that the number of individual investors may decrease, institutional players will compensate it with larger transaction volumes. One of the proofs to this fact are numerous emerging crypto startups like VeChain that corporations start investing in.

The created in 2018 “an open and regulated, global ecosystem for digital assets,” Bakkt, is a new company backed by another trustworthy institution - the New York Stock Exchange. The stress is on the word regulated. Cooperating with Microsoft, BCG, and Starbucks, Bakkt aims to create a fail-safe platform where digital assets will be traded and stored. If Bakkt succeeds, we will observe the true emergence of the first global regulated systems for digital assets. Besides, Bakkt also has a goal to connect already existing markets to the blockchain.

For now, Bakkt is focused on providing the four key services:

  1. Crypto payments;
  2. Savings plans;
  3. Futures contracts;
  4. Insurance on crypto wallets.

Crypto enthusiasts have all the reasons to get excited over this project. Firstly, we all know who is behind it and who’s working on it - Intercontinental Exchange (ICE), the one that owns the NYSE and other exchanges in the US and overseas, steps up as the leading app developer. The cooperation with TNCs named earlier is an inevitable add-on to Bakkt’s credibility. Yet, we want to discuss the future prospects of this company from institutional investors’ point of view.

Regulation and Security

Conventional assets like stocks and bonds have proved their reliability to institutional investors over a long time of their existence. Yet, it is all different and unknown with crypto assets, which do not pose any certainty. Institutional money has got to be in the right hands, and how can one know that for sure, considering the occurrences of cryptocurrency hacks on a constant basis?

Federally regulated crypto storage is a completely different thing, though. Now that investors know by what means and what body their assets are protected, it makes them doubt less the rationality behind crypto investments. Bakkt together with Commodity Futures Trading Commission will ensure these transactions are taxed and legal.

Stability

One of the main reasons for institutional investors to stay out of crypto has always been high volatility of this market. According to predictions, institutional investors can provide huge influxes of capital, which is exactly what’s needed to decrease volatility and move on to more stable prices.

In addition to that, there are high hopes that the involvement of ‘big capital’ from large institutions will tune up the proactive attitude of small and middle-sized investors. Bakkt is going to devote lots of efforts on the popularization of crypto payment methods and ongoing development of these services.

Conclusion on the Institutional Investors Involvement

Legitimacy and openness, not really the adjectives previously used together with ‘crypto’ words, are going to change the face of cryptocurrencies and the way they are viewed by both big institutions and laypeople. If Bakkt keeps doing what it is doing, the bright future for cryptocurrency is guaranteed.

Job Market

Blockchain developer became the top 1 emerging job that made its way up X33 times over the 2017-2018 period, according to LinkedIn report. Global IT enterprises such as IBM, ConsenSys, and Oracle are ready to hire people with solid skills in the blockchain, Ethereum, and cryptocurrency development.

The Glassdoor report on 2018’s job openings has made a big fuss in the media. The research made by a number of Internet websites shows that the number of cryptocurrency related vacancies grew by 300%. And all this within the year of prevailing bear tendencies.

The average salary for professionals in the field is well above average as well. According to the Bureau of Labor Statistics, the median wage for workers across the United States in late 2017 was $44,564 per year, while the base salary in the cryptocurrency industry is $84, 884. The gap can be explained by the high demands towards applicants in terms of knowledge and skills as well as by the localization of enterprises in high-cost cities.

  • Cryptocurrency Updates The new job openings under keywords ‘blockchain,’ ‘bitcoin,’ and ‘cryptocurrency’ only keep increasing due to the continuous developments happening in this area. Some say, 2019 will be a year of updates scheduled for many cryptocurrencies.
  • Bitcoin Updates. Bitcoin, even though the most stable and look-up-to cryptocurrency, is not devoid of drawbacks. Incidentally, the idea behind altcoins was to fix these drawbacks by improving certain features. One of them is fixing bitcoin scalability, which is allowing it to process more transaction per second by increasing the size of a block. Yet, nowadays the two so-called “2 Layer” systems are dealing with this problem, the Lightning Network, and Tumblebit. They allow payments to happen off-chain and get processed before being put to the blockchain.
  • Ethereum updates. The second token in rating, Ethereum also has scalability updates scheduled for 2019. The first one, Constantinople was planned for January. The update, referred to a hard fork, presupposes the full update of rules, in accordance with which blocks are produced. The subsequent updates will happen later this year, namely the introduction of Casper protocol and sharding, with the last update called Serenity.
  • Bitcoin Cash updates. The struggles with bitcoin cash in 2019 will target the 3 following issues: increasing BC’s capability, shortening transaction time, and extensive update protocol.
  • Stellar and Ripple updates. These altcoins will keep improving their scalability as well as seeking bank partnerships internationally.
  • Litecoin updates. Being Bitcoin’s fork, Litecoin updates happen right after those of bitcoin. Since Litecoin is posed as a lighter and, thus, more suitable for small transactions, probably this will be the main target of its developers for 2019.
  • Binance (BNB) updates. One of the leading cryptocurrency exchanges, Binance, is also firmly determined to promote and improve its token. Some of the add-ons are related to expanding the range of features introduced on the website. Binance is going to launch a dozen international fiat exchanges and invest in various crypto projects.
  • EOS updates. EOS developers will focus on the fifth final phase called Cluster Implementation. Besides, the finishing of Inter-Block Communication (IBC) protocol is a required step before the utilization of sister chains and sidechains.

All these improvements speak of the fact that cryptocurrencies do have their drawbacks that need to be fixed. Yet, with every update, we have a product with improved features that are close enough to meet the market’s expectations in some time.

Government Agencies and IoT companies will seek blockchain integration

Blockchain has proved its usefulness and applicability in many areas. In regard to IoT companies, the implementation of blockchain into their products would mean increased security and quality of services. It can create a safe and secure communication framework that will be, apart from everything else, resistant to cyber attacks. And 2019 is predicted to become a year of growth for this particular niche.

The interest of government agencies is attracted by the high potential of blockchain as a database. Indeed, storing residents’ data in the most secure way possible is an aim to strive for. All this leads to believe that the development of blockchain-related projects is in full swing. This, in turn, leads to believe that people supporting this industry have a long-term vision on areas where new products will be applied. Of course, having blockchain implemented in all structures will take a lot of time. However, the tendency points us to the fact the society is moving in this direction.

What are the most promising crypto assets to put on hopes in 2019?

In this section, we are not giving investment advice neither do we encourage our readers to buy crypto assets. The following investment prediction is a form of an educated guess based on the current status of the cryptocurrency market and the prospects awaiting for it in 2019.

So, before guessing whether cryptocurrency will move in this way or another way, let’s summarize the whole picture. Cryptocurrencies vary depending on their features and primary functions. Let’s break them down into categories for better understanding:

  1. A payment method (only). The bright representatives of this category are Bitcoin, Bitcoin cash, Litecoin, Dogecoin.
  2. A platform for applications and a new blockchain. These are Ethereum, EOS, NEO.
  3. Cryptocurrencies with special encryption technology. Coins like Monero, Dash, and Zcash grant anonymity of transactions, making them untraceable.
  4. Hybrids. Stellar and Ripple are both payment methods and blockchain-based systems.
  5. Tokens of cryptomarkets like Binance, Polymath, Zerox.

Some claim Ethereum can overstride BTC in 2019 since with each year it gets treated less and less as a bitcoin extension and more as a separate blockchain and a payment system. Yet, as practice shows, when BTC goes up, the rest of virtual currencies follow. Regardless of what’s ahead, having a diversified portfolio of cryptocurrencies is never an odd precaution.

For example, you can have many kinds of coins present in your portfolio: 10% of Litecoin, Monero, and Zcash; 5% of Bitcoin Cash and 15% of Etheum, and the rest 50% of Bitcoin. Or, you can diversify by groups. Experts, however, recommend focusing on the following tokens this year:

  1. Ethereum that has great growth potential with consideration of its current price and usefulness in app development.
  2. Ripple, which is widely used by financial organizations due to fast and low-fee transaction possibilities.
  3. BNB, a token issued by Binance. As compared to other tokens of the kind, BNB already looks more than promising.

Therefore, if you are planning on investing in crypto assets, you need to make a reasonable proportion of different cryptocurrencies. And, of course, a regular market watch is a must because there surely will be something to discuss in 2019.

The Final Thoughts

There have been many negatively-tuned talks surrounding bitcoin and cryptocurrency system in general over the last year. The predictions for 2019-2023 are just crazy. Some believe bitcoin has already crashed and merely holds on till its final breath. Some predict sky-high strides up in price. Others are positive, yet, realistic, claiming that BTC will reach and overstride its previous all-time high rate in response to the next halving.

We too belong to the latter category. We are pretty sure that the down condition, in which bitcoin has been since its last all-time high is just a part of the cycle. Besides, we always need to remember that markets are driven by a collective emotion of investors. Today’s moods are simply a reflection of a long-awaited surge in price that drives many people (especially crypto asset holders) crazy. What we think is the right thing to do here is to think rationally and poke into graphs. The overall picture of bitcoin’s ups and downs over the 10-year period helped us find valid reasons to believe it’s not over yet.

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