9 Cryptocurrency Trends To Guide Your Investment Strategy In 2019

The Bitcoin whitepaper turned 10 years old in 2018, and the revolution it brought has come a long way.

The concept of blockchain being applied to finances has challenged the central banks. Currently, banks control the world economy, and can make it rain money over who they want, where they want, and when they want.

Blockchain and cryptocurrencies are creating a transparent distribution of money with fixed supply, free from the economic manipulation of a few people at the helm of power.

This challenge to the status quo is not expected to be met with grace by the operators of the current system. Everybody wants technological advancement, but also nobody wants to have less power than they had before the advancement came.

This is one of the underlying elements stalling the adoption of cryptocurrencies by traditional financial institutions. In fact, this antagonism helped trigger the crypto industry’s 2018 bear trend.

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.

Takeaways From 2018 Trends: Our Predictions and Reality

Our article from early 2018 spelled out trends that we thought would develop over the course of the year. And while none of us were prepared for just how intense this bear market would be, it is interesting to look back at where we thought crypto was headed.

Dapp Platforms

The first trend mentioned was about dapp platforms. We witnessed the mainnet launch of some of the blockchain platforms with the potential to be “Ethereum killers,” such as Tron and EOS. The prediction emphasized that it is still too early for dapps to succeed, and in fact many of them will fail, but the underlying platforms will continue to pull through.

Interestingly, while we predicted ETH, NEO, and EOS as being active dapp platforms in 2018, the dynamic progress seen with the Tron mainnet, resulting in dapps migrating to Tron from Ethereum, has snuck in on us from the sides.

ICO Craze

The second trend was the ICO craze, which had a fascinating trajectory over the course of the year.

ICOs cooled off, particularly in the second half of the year, due to regulations from government agencies such as the SEC and CFTC. These regulations are aimed at protecting investors from fraud, but make things difficult for many crypto projects.

The dominance of Ethereum (as a dapp platform) for most of the year and the pushback by regulators was predicted, with 70% of all ICOs being launched on Ethereum which led to the spike in ETH price.

Also predicted was the rise of ICOs on other platforms, as well as the necessity to look to other means of fundraising, such as the pre-ICO.

Scalability Debate

The third trend is the scalability debate, which continued to make a splash in 2018.

With the bear market, questions began to pop up as to whether these crypto projects are capable of what they claim. As predicted, the Lightning Network got the spotlight, growing at a significant pace.

Other blockchains are also unveiling their plans to scale, including sharding and the Constantinople upgrade for Ethereum.

Security Token Offerings

The fourth trend about security tokens hasn’t really taken off because regulatory compliance has taken much more time than expected.

Instead, we’ve seen stablecoins stealing the show as the price volatility made people long for cryptocurrencies with a stable value.

Ease of Purchasing Digital Assets

The fifth trend predicted was that the purchase of digital assets would become significantly easier.

This has indeed happened over the course of 2018, with platforms such as Cashapp enabling people to purchase bitcoins and even the “conservative” Coinbase adding cryptocurrencies like 0x and BAT to their exchange, with plans to add even more.

Also, some institutional investors have come into the OTC market, and there are more financial products attached to Bitcoin (such as Bitcoin Futures) unlike before.

9 Cryptocurrency Trend Predictions for 2019

crypto_trends_2019

Generally, the market has been really slow in 2018.

Bitcoin, known to be really volatile, demonstrated some periods of flatness over the course of 2018, in which the price of Bitcoin barely changed over 12 hours or more.

The downtrend in the market also hindered adoption, as there was a great deal of bitterness towards cryptocurrencies from people who experienced severe losses.

There isn’t a clear cause of this latest bear trend that has hit the market, which makes it hard to predict what will bring the market back.

Knowing this, it is important to consider a few trends that might gain traction in the year 2019.

Trend #1: 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.

The usual trade volume from crypto-to-fiat and fiat-to-crypto exchanges may experience an uptick, but crypto-to-crypto exchanges are unlikely to experience any rise in volume and may suffer lower trade volumes for the most part of the year.

If institutional investors (such as the contemporaries of Yale, which has already invested in the crypto industry) come into play over the course of 2019, they will certainly not be keeping their gains in crypto.

Hence, it is highly unlikely that they will trade or invest in any coin that does not trade directly with fiat.

Trend #2: 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.

Trend #3: More Institutional Investors Will Come in Slowly Throughout the Year

Institutional investors are more careful not to lose money than they are eager to make money. Most of them take due diligence very seriously and are very gradual and cautious in their approach to investing.

Just like Anthony Pompliano, CEO of Morgan Creek tweeted:

It will probably take years before institutional money settles fully into the crypto market but the process is poised to see some momentum in 2019, spearheaded by developments such as the Bakkt Bitcoin Futures.

There are signs already that hint at the gradual entry of institutional investors. Various financial companies are coming up with different financial products for Bitcoin and other cryptocurrencies to make it easy for institutions to invest. This should not be taken as an automatic precursor to a bull run, as they can sometimes come in to short the market.

Trend #4: News and Events Will Stop Being Big Market Movers

Trading news has been a lucrative venture on crypto markets. Whenever there is a speculation on a big event or news, the market usually responds.

The idea is to buy when the rumor begins and sell when the news is out, if the news or event is a good one. For a bad news or event, the goal is to sell early and (maybe) buy again when the price has hit rock bottom.

This trend might not be completely be wiped out in 2019, but it will be drastically reduced. The reason for this is because the market is wider.

Lots of speculative traders have already been burnt in many trades. The majority of those who still own significant amounts of cryptocurrency might not be willing to trade based the news.

Also, observing the lesson from the bear trend of 2018, many seasoned traders would be skeptical to trade based on news and rumors. And new, inexperienced traders are unlikely to come into crypto after the bloodbath experience in 2018.

Trend #5: 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.

Trend #6: More Projects Will Throw in the Towel

The news of crypto projects calling it quits has increased.

Recently, Basecoin has thrown in the towel and plans to return money to investors. This is because of regulatory requirements, as the coin will obviously be classified as a security. This is only one example of a budding project that has gone under, and it’s far from the last that we’ll hear about.

Many projects began ambitiously without a reality check, and now they are being slowly asphyxiated by the bear market. Some are probably waiting on others, so as not to be the first to quit, but more will quit before the bear trend turns. Some that are already trading on exchanges will make little or no progress in 2019 because of the hurt they have suffered.

More projects will throw in the towel as a result of the heightened regulatory compliance that applies to being classified as a security token, and also lack of funds.

It is important to note that some will be saved by VCs, some of which are already raising funds to help some crypto projects stay afloat.

Trend #7: 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.

Trend #8: Serious Efforts Towards a State Cryptocurrency

The regulatory framework for cryptocurrencies is already taking shape in most parts of the world. This will lead to a gradual maturity of the crypto industry.

However, governments’ fascination with the industry might lead to serious efforts being made towards establishing various state cryptocurrencies. Russia has already expressed interest in launching their state cryptocurrency, the Cryptoruble, in 2019. And there is also the suspicious cryptocurrency backed by the Venezuelan government, the Petro.

A full-fledged state cryptocurrency might not happen in 2019, but there will be serious efforts directed towards it. The launch of a state cryptocurrency will likely trigger a bull run in the crypto market, as more people will be forced to become active in the crypto space.

Trend #9: 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.

It is too early to speculate which platform will win such a battle.

Conclusion

2019 is expected to be an exciting year for cryptocurrencies. The emphasis of the year will be on building and development of the industry to earn back the hype and valuation it enjoyed at the peak of the market.

The year 2019 is expected to end with a higher valuation of the crypto market than the year started with. However, the difference in valuation might not be much, and it might take a while before we get back to the highs we saw in December 2017.

Every year in the crypto industry brings at least one unexpected trend.

2019 will not be different, as the industry is likely to evolve in an area that little or no attention is paid to at the moment. It could be in mining, an exchange feature, a different coin classification, another use case for blockchain platforms, a type of dapp that goes viral, or blockchain narrative that triggers adoption.

What’s certain is that the crypto developments in 2019 will surely be exciting to watch.

These are informed predictions based on our perceptions of the market, but they’re only opinions — and as we have seen, the market has its own mind.

2019 calls for cautious optimism; always remember to do your own research.

3 Comments

  • Dave
    Posted December 26, 2018 9:04 pm 0Likes

    Good recap of the year. Enjoyed it and didn’t skip trough it

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    Your comment *how do I start.

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