Hello everyone! Happy New Year! May 2019 be a good year to all! 2018 was a wild ride for the crypto market. From reaching the peak in January, the market collapsed and finally ended the year at around $125b market cap. At this point, many might ask what is going to happen in 2019?
While I do not want to speculate on the price, I will like to share my thoughts on some developments in the crypto market/projects and what they might lead to. Instead of saying they are my predictions, some are more of my wishlist than predictions. Before I start, I will like to highlight that I am not a financial advisor and none of these should be taken as financial advice.
Market Will Completely Capitulate
When discussing about price, I like to take Bitcoin (BTC) as reference since all other coins have their price anchored on BTC. Many people think that BTC has bottomed out at the low $3000 level. Although I secretly hope that is true, the logical side of me doubt so.
BTC was hovering at the $6000 range for too long and many short-term speculators bought in at that time thinking that was the bottom. These speculators are here to make a quick profit and do not believe in the long-term vision. Hence, if BTC ever goes to the $5500-$6000 range (which I firmly believe we will reach in 2019), that level will serve as a strong resistance as many will be selling at that level to cut loss.
Once the price bounces off that level, a new low will be reached and that is when most short-term speculators capitulate and the price bottoms out. My guess is that we are going to hit low or mid $2000 (or even high $1000) as that is the accumulation price during May-Aug 2017. Support will be very strong there and psychologically, a BTC under $3000 will be seen as a good entry price.
Institutional Investors Will Not Rush In Yet...
A lot of hype in 2018 revolves around the hope that institutional investors will be coming into the market with billions of dollars. The Bitcoin ETF and Bakkt have given false hope to many crypto investors that institutional investments are round the corner.
However, we see the ETF and Bakkt being delayed time and again. These delays in conjunction with the suppressed prices are not a coincidence. Rather, these institutions are delaying because the price is low and too easily manipulated. This is the key criteria for an ETF to be approved. Similarly, for Bakkt to be effective, they will need to take on a huge amount of price volatility risk. Hence, at the current price, I think it is going to take some time for institutional investors to get in.
Furthermore, the ETFs and Bakkt are just there to provide the infrastructure and instruments for institutional investors. Having them does not immediately mean that the hedge funds and other managed funds will be pouring money into cryptocurrencies. These large institutions often have corporate governance in place. There are many checkboxes that need to be ticked before a small investments can be made. Therefore, be realistic with the situation. When institutional starts to come it, we will experience a FOMO which is a at totally different level.
Security Token Offerings (STOs) Will Just Get Started
When the market is down, we like to find areas to pin our hope on. STO is one of them. While I think STOs have tremendous potential, it is not going to play out as what most people think it will. Most people think that the developments of STOs will leave to a new round of FOMO and bring along a new bull run. I beg to differ.
Technically, STOs are the same as ICOs. It is just minting of virtual tokens to represent real world items. In the case of STOs, the real world items are securities. The key difference between STOs and ICOs is regulation. STOs are going to be heavily regulated and therefore unlike to lead to FOMO as what the ICOs had brought. In addition, regulations also take a long time to form and get approved. Hence, developments in STO will be slow. Furthermore, unlike ICOs, STOs exchanges will also be highly regulated as well. This brings additional concerns to potential investors as we will not know when the tokens will be listed and turn liquid. There is no point in holding a bunch of illiquid tokens.
Recently, I get to know about a company called Preflogic. They are a security token issuing platform and they are attempting to raise funds for their project. Currently, they are issuing shares of their company to raise funds. However, they are not doing a STO. Why? Simply because there are still many uncertainties around the development of STOs. As a result, they are issuing shares through traditional methods of seed crowdfunding.
I think STO will eventually disrupt the traditional assets market. It will lead to lower barrier of entries when it comes to asset listings. We probably will see new asset classes emerge as part of the adoption of STOs. But, all these are going to take time and I do not see it taking off in 2019. It is going to also take time for investors of traditional assets to get accustomed to STOs. All these developments are likely to take years.
Projects Funded Through ICOs Will Continue to Struggle
We live in a world where most day-to-day transactions are still using fiat currencies. It is therefore unfortunate that the ICOs projects will have to sell cryptocurrencies for fiat in order to make ends meet. Which I think is the true reason why Ethereum price is taking so much of a hit.
With market not fully capitulated yet, a new bull run is nowhere near. There is no point for these projects to sell their ETH at such a low price. Many of them will then need to seek fresh funding from new investors. On top of that, they will have to make sure their products gain adoption soon and revenues start coming in. Otherwise, it is just going to be a slow bleed out.
I think many ICOs did not manage their funds well. They failed to "cash out" their ETHs to ensure that they have sufficient fiats to keep their business afloat during this bear market. Hence, I think there will be more who will bankrupt and die in 2019. It is unfortunate, but I think it is part of market capitulation. Which is similar to the dotcom bubble in the early 2000s, where we saw many new technology startups failed to survive the crash.
Community Driven Projects Will Thrive
As mentioned, projects that had jumped onto the ICOs bandwagon and raised money will struggle. On the other hand, projects that have a very strong community of users and developers will thrive during this downturn.
BTC did not have an ICO and its development is largely driven by the community. Ethereum has an ICO but it also has a strong community of developers. I think that as more ICO-based projects are filtered out by the bear market, these projects will shine in 2019.
Interestingly, @coingecko is able to help us sort projects with high level of development and community involvement. By heading over to their site, you should see a very different list as what is sorted by the market cap.
Top 20 crypto projects sorted by development activities
2019 is the year for developments or what the crypto space coined as BUIDL. I think it is the time for enthusiasts to get excited again and investors to take a step back. Community driven projects will be in pole position to BUIDL and progress without having to worry about making ends meet.
Non-fungible Tokens (NFTs) Will Start to Get Hot
As mentioned in the previous section, I believe that 2019 is the year for crypto enthusiasts again. How did Bitcoin started to gain adoption? It all started with a few enthusiasts mining running nodes and mining BTC. How did Dogecoin get so popular? It started with a few enthusiasts who wanted some fun and started giving out Dogecoins for fun. I think 2019 is the year for all these fun stuff to take off again. In my opinion, NFTs will be the fun and hot topic of 2019. Virtual collectibles will be brought to a whole new level with NFTs.
I used to play a lot of Massively Multiplayer Online (MMO) games. One of the key reasons that I stopped is because I do not see any continuity. I put in time and effort playing these games to see them eventually lose popularity. I got really tired of it. With NFTs, things can be different. I can play World of Warcraft and earn some unique items, and they can represent something unique in Minecraft too. That is the kind of gaming ecosystem I will like to see. I like to see the effort I put into one game has an effect in another game.
Besides gaming, NFTs will also gradually become a fun way to send personalized gifts and customize user experiences. Imagine you have a set of emojis that are unique between you and your close friends. No other people can use the emojis and it therefore creates a highly personalized experience.
Recently, @coingecko did a NFTs giveaway for Christmas. I think it is a proof-of-concept on how NFTs can be used to create a special bond between the issuer and the recipient. I think that is where we might be heading towards and NFTs will be getting a lot of attention in 2019.
Conclusion
I am not here to FUD. I am just being realistic. The roller coaster ride of 2018 was in part due to unrealistic expectations as to what distributed ledger technologies can bring. Most of the hype was built on empty promises. As Warren Buffett once said,
"Only when the tide goes out, do you discover who's been swimming naked "
I think 2019 is when the tide goes out and many of these bubbles of promises will burst.
I hope 2019 will be the year where the crypto market loses the unnecessary media attention. This will bring a perfect period of actual developments. I also like to see more layer 2 and 3 solutions being built on established blockchains. I believe these will lead to mass adoption. Hopefully, we will get to see one on Steem too! A killer app which will give users every reason to sign up on Steem.
I remain bullish of the future of cryptocurrencies in the long term. If you do not have the investment horizon of 5-8 years, then you should not be investing in this space. There were too many people who were here to earn quick profits. In order for this technology to develop in a sustainable manner, these people need to be flushed out.
Thanks for reading! Do share your thoughts and let me know what you think will happen to the crypto market in 2019.
P.S. Side prediction. I think the stocks market will hit a new all-time high in 2019. The overall narrative is too bearish and the mainstream media is trying to paint a picture that is very negative. Being a contrarian, I think there will be a twist in narrative of the recent happenings (e.g. trade war, government shutdown, rate hikes and slowing economy), which will lead to fresh optimism and a run up to a new all-time high. I think fundamentally, the economy still have some gas to burn and will not enter a recession so soon. We shall see. I hope all these drama in the traditional markets will take away unnecessary media attention from crypto and I can take my time to accumulate 😎
Well thought out article,I think your spot on with the price of BTC probably dropping a lot lower once it reaches $6000 that’s what I’m going to wait for. Thanks mike
Thanks! Yea, I think $6k is going to be a very strong resistance. If we convincingly get above that level, then I think the trend would have been turned
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Thank you for sharing these thoughts. I particularly like your analysis on STOs. Although it is fun listening to the when lambo crowd pump what are essentially gonna be after hours penny stocks trading for the small folk.
Yea. There are still much to be done at the regulatory end. All these are going to take time. Also, if the objective is to attract traditional investors, then STOs platforms will need to be user friendly enough to bring in those less tech savvy investors. Hence, it is unrealistic to say that STOs are going to fly in 2019.
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Based on market and stock behaviours, I think the cryptocurrencies might have bottomed out, or latest by the first quarter. I feel they will rebound after that. Just my uneducated opinion.
I hope so too! I am already invested so I'm hoping that was the bottom. Haha..
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Market usually contradicts common consensus: it should not be easy to make money in the market. The most popular consensus is that BTC has not bottom since we have not seen high volume capitulation below the strong support of $3K (i.e. it took three months to break the resistance back in 2017). The contradiction is that BTC has bottom at $3120. Choose your own blue pill at your own risk :)
Lol.. indeed. I hope that the bottom was already in though I doubt so. Thanks for the comment anyway. Happy new year!
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I suppose only time will tell! I remain hopeful.
Indeed. Time will tell!
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you have a point. Thank you for sharing. for me. just to see btc go back to $8k or more. I'll be fine. btw how about making a prediction on an exchange. I saw kucoin made an update. https://news.kucoin.com/en/kucoin-platform-2-0-bi-weekly-progress-update%EF%BD%9C2018-12-31/this is what i'm talking about.
I think the development of exchanges is not going to be a game changer in 2019. We will probably see more decentralized exchanges (e.g. Binance is building one) being released. But with investors losing interest, I think they are not going to make a huge difference.
I do hope to see better atomic swaps technology being developed so that we can have true cross-chain decentralized exchanges. That will be nice to see :)
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Bitcoin will climb dramatically this year.
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I hope so too :)
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Hope Crypto market day by day incresing. Thanks sharing for this post.
Slowly but surely. Haha.. that's the way I like the price to move. But it is not the case right now
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There are so many speculations and predictions when it comes to cryptocurrency for this year but we are all hoping for a good run, that's why we also need to have a good exchange for all of our cryptocurrencies and I found this complete guide and review of kucoin exchange by blockonomi
https://blockonomi.com/kucoin-review/
Thanks. I think kucoin is an underrated exchange. It has a nice interface and good users support. But not much volume on it
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It is also important to use the right exchange for the cryptocurrencies that we are going to invest this year! Well, been finding different reviews and here's what I found. https://worthofcrypto.com/exchanges/kucoin-review-2019/