2020 Vision
Behold: the trends and tropes that (we think) are going to shape crypto in 2020.
I suspect that in retrospect 2019 will be viewed as a year of false promise for crypto. Certainly when the price soared in autumn, the trend seemed unmistakeable: Facebook had announced their cryptocurrency, Libra; Bakkt was launching in a few months, promising an influx of institutional money; exchanges were reporting a massive uptick in new registrations. All we had to do was sit back and watch the Lambos roll in.
And then, well, things got muddy. Libra became mired in regulatory concerns. Bakkt has been slow to start. Google searches have fallen to levels not seen since early 2017. Alts have been suffering hideously and bitcoin isn’t far behind. Even China’s blockchain revolution failed to change the prevailing mood. Suddenly 2019 was looking less like 2017 redux and more like 2016, a year of stagnation, infighting and uncertainty (when, incidentally, the price of bitcoin also quietly doubled).
But we think there’s plenty of reasons to be rosy about crypto in 2020. Here’s what we’re looking forward to.
The Halvening
Well, duh. There’s a fair argument to be made that this is the only story in cryptocurrency for 2020, at least as far as price is concerned. In May next year the amount of bitcoin created by every mined block will fall from 12.5 to 6.25. When the last “halvenings” occurred (in 2012 and 2016), the price of bitcoin proceeded to skyrocket over the following year-and-a-half. Will history repeat or will the halving instead cause a runaway spiral of miner capitulation, short-selling and retail evacuation leading bitcoin back to three digits? Only time will tell, but boy it’s exciting.
Raising the stakes
And let’s not forget the world’s second largest cryptocurrency: at some point over the next few months Ethereum plans to make its much anticipated transition to a proof-of-stake network. This means that rather than ether being mined a la bitcoin, it will be doled out to people who “stake” ether they already own. This change has been a long time coming for Ethereum, so much so that it’s not even the first to the staking party: top 20 coins Tezos, Cosmos, Tron and Neo are already dishing out staking rewards to their users. For Ethereum it’s the first proper step on their way to becoming the “world computer”, but it should also drive interest and market momentum toward this new generation of passive income coins.
Central banks crashing the party
Here’s a fun new acronym to wrap your brains around: CBDC. That’s short for central bank digital currency and we reckon there’s a pretty strong chance you’re going to see your first major CBDCs go live in 2020. China looks eager to get the party started – surveillance capitalism writ very large? – and there’s plenty of countries that look like they’ll be close behind, from the EU to South Africa, Sweden, Singapore, Canada, Iran and more. Combined with the rise of stablecoins and we think bitcoin may not remain cryptocurrency’s biggest asset for too much longer – and that’s a good thing for crypto.
The sad, sad story of alts will get sadder
I said it months ago, and I’ll say it again now: most alts are never going to recover from the downtrend they’re currently in. There may be moments of respite, but there’s simply no economic reason for the vast majority of coins to have the value they currently have. Add to that the potentially still untapped selling pressure from developers and early investors as they frantically try and milk the last capital out of their dying ICO and you have a recipe for more continued pain in 2020.
Some alts however…
Will buck this trend. Most of the major cryptocurrencies (as in the actual money analogs) would likely follow a returned bitcoin bull market, while both exchange and security tokens show promise, if only because they have an actual, discernible use case. Consumer-focussed ICOs are unlikely to ever come good again – I mean, seriously, there was a coin for the dental industry – but utility coins such as Ethereum (smart contracts), BAT (ad-free browsing) or 0x (decentralised finance) should prove that they have a reason to keep existing. And did I mention staking? Keep an eye on staking.
And that’s it from me for this year. Thanks for reading and here’s to a crypto 2020 that we’ll be telling our grandkids about. In a good way, not in a First World War way.
Happy trading!
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