The turn of the decade closes the previous year’s highs and lows for the cryptocurrency market. During the past year, the cryptocurrency market encountered an overall climb in prices but also challenges with regulations and security concerns, yet still benefitted from the swiftly developing reception of digital currencies and payments, and enhancements to blockchain technology.
Several major milestones that brought cryptocurrency into the sight of the mass market include Mark Zuckerberg testifying before the US Congress on behalf of Facebook’s proposed cryptocurrency Libra. This not only tested cryptocurrency’s positive influence on public policy, but also affected the movement of cryptocurrency prices. Amid such positivity, security breaches continue to be a concern across platforms as the risks of hacks and thefts remain. Other events on the global stage like the US-China trade deal are also said to have contributed to the losses, net negative, and slumps that Bitcoin, Ethereum, and other networks experienced in 2019.
At the very beginning of 2020, the dominant cryptocurrency Bitcoin fell short as it traded below $7,250 on January 1 and showed little signs of a rebound from its nearly half-a-year slump. It was a similar picture for other currencies, but analysts still emphasise the capacity and promise of the market to rally in 2020. At the time of writing, the value of Bitcoin went above $8,800, fulfilling the predictions of a rally to $8,000 in the first quarter of the year.
With mainstream media producing discourse on a long future for cryptocurrencies, investors are tracking historical data and studying the future market and global geopolitics to support their positive predictions for 2020.
Cryptocurrency Outlook in 2020
It is clear that more and more people from different sectors of society will turn towards building their digital assets portfolio and using alternative forms of banking and investments. From outrageous price projections to the future of altcoins, crypto analysts and industry leaders are rolling their dices on the fate of digital assets in 2020.
1. Bitcoin will continue its dominance in 2020
The most concrete event that will take place this year is the Bitcoin halving in May, which would likely drive its price to rise dramatically as halving introduces new scarcity to the market. Nevertheless, many analysts and industry leaders are mostly confident in Bitcoin flourishing not only in its value but in its dominance. This means that alternatives to Bitcoin will either delist or merge with the network for mining.
Because of the general volatility of the market, pinpointing a single event or factor to the movements in cryptocurrency is difficult. However, political tensions and crises are contributing factors to surges, just like Bitcoin and other cryptocurrencies rising in value in the light of the ongoing standoff between the US and Iran. This also happened during the height of the US-China trade war. Nigel Green, CEO of financial consultancy firm deVere Group said: “the latest bitcoin price increase underscores a mounting consensus that bitcoin is becoming a flight-to-safety asset”.
In the undulating global terrain, Bitcoin remains as the most widely adopted cryptocurrency and will continue to be a choice of security for investors. Moreover, it is believed that 2020 will not be characterised by the same drastic fluctuations in its value as seen in the previous year.
2. Stablecoins will be widely adopted
Stablecoins have been gaining traction in mainstream use, particularly for the security attributed to its backing by real-world banking institutions and fiat currencies. For example, one could trade in real currency for digital coins to be used for buying and/ or trading in online platforms. The development of Libra further advanced the discussion on stablecoins and how other governments or institutions could either regulate or leverage virtual currency frameworks.
Despite stablecoins presenting some level of threat to conventional banking systems, its successful asset raise and the introduction of non-fiat exchanges will only propel its continual adoption by more users.
3. Cryptocurrency ecosystems will improve
The number of decentralised finance (DeFi) applications will continue to grow in 2020. This translates to the development of more exchanges, markets, and other platforms that will serve miners, analysts, investors, lenders, entrepreneurs, and other stakeholders in crypto and digital currencies.
More privacy protocols will also be built and set to protect digital wallets and exchanges from the kind of hacks and breaches that happened in 2019, such as the Ethereum Classic hack. Ethereum 2.0 will showcase its improvements in the blockchain system with its partial launch in 2020.
4. Policies and regulations will evolve in favor of the market
In 2019, many government institutions, especially in the US, were vocal about the potential risks and dangers of cryptocurrency—with possibilities of its use for fraud and other criminal activities. However, in the last quarter and what could be forecast for the year ahead, states in the US are becoming more and more receptive of blockchain technology.
Besides the crypto-friendly western countries, Asia is also seen as a very important region for cryptocurrency projects. Mining farms, large exchanges and many ICOs have found their home here. Singapore is one of the countries willing to supervise cryptocurrency projects while being aware of some of these risks. The Monetary Authority of Singapore (MAS), the central bank of Singapore, in response to investor interest, announced its plans to bring cryptocurrency futures traded on licensed exchanges under its control. A special licence, however, is required if you are interested in registering a cryptocurrency exchange in Singapore.
Tread Wisely in the Cryptocurrency Market
There is no doubt that any smart investor should study how to exploit the evolving blockchain technology and how cryptocurrency could be utilised in cross-border banking and payment solutions. However, one should be careful and calibrated when entering a volatile market without first mastering the concepts behind the technology. It is especially important to consult professionals, especially in utilising these tools for global investments and setting up offshore companies.
Desfran has years of experience partnering with innovative entrepreneurs and supporting them when facing challenges and opportunities. Our team of researchers and experts provides tailored advisory to fit the vision and goals of every business. Contact us today to learn more about how we can help you with your needs.
References
2019 in Review: Another Year of Highs and Lows for Crypto, CoinTelegraph.com
Advancing Within 2019 Range, Bloomberg Crypto Outlook – January 2020 Edition
Bitcoin and cryptocurrencies had a very bad day, TechCrunch.com
Bitcoin Closed Q4 in Losses; Two Major Catalysts for a Rally in Q1/2020, NewsBTC.com
Ethereum Is Now Officially Net Negative In 2019, Down 91% From ATH, NewsBTC.com
Bears In Control As Cryptocurrency Market Turns Lower, CryptoBriefing.com
‘Cryptocurrency Will Not Die’: Mainstream Media on Bitcoin in 2019, CoinTelegraph.com
Crypto Will Be Big in 2020, Medium.com
7 Big Bitcoin and Cryptocurrency Predictions for 2020, DailyHodl.com
Iran Crisis: Bitcoin Price Surges Amid Growing Tensions With US, Independent.co.uk
Where is the cryptocurrency industry heading in 2020, Currency.com
Cryptocurrency Predictions for 2020: What Should We Expect, Coindoo.com
