Some crypto projects were indeed valued beyond the reasonable market valuation during the 2017 bull run. However, the market was caught in a trap when the majority of people buying cryptocurrencies were doing so to profit in fiat.
The 2018 downtrend has shaken a lot of people out of the market. Some people have used the opportunity to get smarter and learn more about what this new industry is all about. Now we are seeing rising use of the term “buidl,” which is a variant of hodl but means to do something to grow and develop the blockchain ecosystem.
Before we see the trends that looks promising for 2019, let’s consider the trends we all expected in 2018, and the reality that resulted.
Crypto Margin Trading Trend Will Subside
The trend of crypto trading has already suffered a blow in this 2018 bear market, with a lot of people losing lots of money. Some traders kept their gains in Bitcoin, forgetting that Bitcoin itself is subject to a drop in price, leaving many with only a fraction of the value that they bought in for.
Moreover, many of those who did cash out had to pay income tax on their gains, leaving them wondering why they bothered to invest in the first place.
This has greatly discouraged the trading trend.
However, this doesn’t mean an end to crypto trading. Some will keep trading, having become wiser from the market’s fluctuations; others will relegate trading to when it is absolutely necessary.
This will result in a stiff competition among crypto exchanges as they try to capture a significant chunk of the market.
Price Volatility Will Be Low
Bitcoin experienced serious price volatility in 2017 that affected the whole crypto industry.
In 2018, the price volatility has been more subtle. Price changes over short periods of time have not been significant. There were moments where there were big price changes within 24 hours, but they were quite few.
This trend looks to be positioned to continue into 2019, as we will likely see more price stability in the crypto world than we have in previous years.
This is a good sign for institutional investors as they are more comfortable with steady growth as compared to rapid fluctuations. Also, this is also good for user adoption, which is really the backbone of the growth of the industry.
There Will Be No Massive Bull Run
The market is yet to recover from the bear market. There have been supports for Bitcoin at around $12k, $9k, $6.5k, $5k, $4k, $3.5k and they have all been broken. Many have underestimated how low Bitcoin can go.
The bear market is not over until the price goes up and refuses to go back down to where it was.
Bull runs don’t just pick up after severe bear market trends. As the famous saying on Wall Street goes, the bear jumps out the window but the bull climbs up the stairs. This means that bear markets are sudden while bull runs are gradual.
The massive bull run experienced in 2017 was a build-up that was years in the making.
However, there should be small bull runs within the year. They might be based on the Bitcoin ETF approvals or other bullish news, or they might be completely spontaneous.
Scalability Will Still Be an Issue
Scalability is still an issue in cryptocurrencies today, as they have not achieved speeds that will make them valid competitors to centralized businesses that deal in funds transfer.
Ethereum, for example, is still stuck at 15 transactions per second. It is highly unlikely that Ethereum will fully scale in 2019, although it is expected that there will be a clear pattern and timeline to its scaling via sharding and the Casper Protocol.
It would be wise to give dapp platforms about a year more to figure out a concrete solution to scaling. Meanwhile, the Lightning Network is expected to grow more, and might achieve full adoption in the course of the year.
The Rise of Security Tokens
Once the regulatory framework is clarified, the crypto space will become conducive to launch security tokens.
Security tokens have been slow to gain traction in the crypto space because of the uncertainty around regulations. However, studies have suggested that security token offerings are better fundraising models than the outdated ICO, and once uncertainties are settled, it might trigger a rise in security tokens in 2019.
Security tokens are by nature more favorable for crypto investors, as the tokens purchased are backed by an actual stake in the company carrying out the token sale. This is unlike the present traditional tokens where the tokens are a form of currency or carry a form of utility, and are not backed by any stake in the issuing company.
The critical part of the rise of the security tokens is the battle of the blockchain platforms. Some security tokens will be created on their own platforms, however, most will make use of existing platforms. While the top platforms might enjoy a piece of the trend, one platform will likely stand out as the winner of the battle.
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