This article will attempt to forecast macro trends for the crypto market leading into 2020. All assertions are based solely on the opinion of the author, and should not be taken as financial advice. Always do your own research.
Institutional Investment & Adoption
It’s no secret that Wall Street wants in on the blockchain boom. And with platforms like Baakt finally coming to fruition, the infrastructure now exists for institutions to diversify into the crypto markets. But these institutions won’t stop at investing. Big tech giants like IBM, Amazon, and Facebook have all put forth significant effort to adopt blockchain based technologies. As 2020 rolls around, I expect crypto to become increasingly mainstream.
There are several ETFs that have been proposed to the SEC, and so far they have put off any decisions. But they can’t drag their feet forever. At some point in 2020, I expect the first Bitcoin ETF to be approved for sale in the United States. Similar funds have already been approved in Europe, and the US is lagging behind. When approved, this will open the door for more traditional investors to easily diversify their portfolios, and provide widespread accessibility. Since Bitcoin has a limited supply, I expect this to have a significant bullish effect on the currency.
Bullish BTC leading to Block Halving
The core of Bitcoin’s economics is very simple: supply and demand. As Bitcoin’s inflation rate (in the form of the block reward) decreases on April 30, 2020, the supply will decrease precipitously. The term “halving” refers to the block reward being cut in half, which occurs approximately every for years. (For more info on block halving, check out this article).In conjunction with increasing institutional demand, the bullish effect could be parabolic. This trend holds in tact when looking at the history of Bitcoin’s block halvings. Check it out:
The de-saturation of the Crypto Market
“The Great Cleaning” of the crypto markets will continue. There are far too many scams and projects destined to fail which have plagued the market for years, costing investors millions of dollars worth of wasted Bitcoin. 2020 will be the year of reckoning for these projects. While a booming market and increased adoption will cause legitimate projects to skyrocket toward success, the market will also have higher standards for projects to meet. Those projects that fail to meet the mark on transparency, use case delivery, and innovation will inevitably fail.
As it stands, the crypto market is like the wild west. While many die hard bitcoiners love this aspect of the industry, it certainly has its downsides. In 2020, regulations surrounding taxing crypto gains will continue to take effect. But with this regulation will also come increased protection for less experienced investors — due to bad actors being held accountable by governments. This is a necessary step toward the realization of a global blockchain economy.