All the stars are lining up to make 2019 the year that crypto makes it's come-back with a vengeance. With Bakkt and Fidelity trading desks becoming available to institutions and half a dozen major financial firms looking to provide similar service we are on the brink of seeing institutional money officially making an entry into the cryptocurrency space.
The herd is coming
"The herd is coming", as famously said by Galaxy Digital's Mike Novogratz, and 2017 was only a glimpse of what is about to come. While the entry of institutional money has long been philosophized to occur on multiple occassions in the past it is finally looking like it is coming to fruition. Very significant is Fidelity Investments, one of the world's largest financial service providers, who is starting it's cryptocurrency trading desk very soon which deals with custodianship and trading of real, actual crypto, opening up the cryptocurrency space to about $7.2 trillion dollars worth of investment money.
Similarly, the Intercontinental Stock Exchange (ICE) which is the New York Stock Exchange's (NYSE) parent company, is eager to launch Bakkt before the year's end, which is a Bitcoin futures tradingplatform which deals with actual Bitcoin as the underlying asset. With it's connection to NYSE:ICE, one can only imagine the money flows that this could generate for the space. According to Wikipedia the New York Stock Exchange itself does about $20 trillion dollars of trading volume yearly - and all of that money will most likely for the first time ever be exposed to the wondrous world of Bitcoin investing. Besides being founded by one of the most reputable financial organizations in the world, Bakkt is further partnered Microsoft and Starbucks. In the case of the latter it is being rumored that there will be some way to sell cryptocurrency for dollars, which can then be spent at Starbucks. Not quite the same thing as paying with crypto, but perhaps close enough for the time being. Bakkt is further backed (pun intended) by large investors such as Galaxy Digital, Fortress Investment Group, Pantera Capital and a list of others just as significant.
In Europe the Swiss Stock Exchange (SIX) is similarly working on an actual crypto-asset exchange which deals in securities, and interestingly enough they are one of the partners of Blockstream's Liquid Network. The latter, I might add, might play quite a big role in all of these developments in my opinion as a lot of the above tradingplatforms are likely to eventually join or at least utilize the Liquid Network as well if it proves to be succesfull. Meanwhile, Binance is working with the government of Malta similarly to create a regulated digital securities exchange there.
In the meanwhile the existing cryptocurrency space isn't sitting still by a longshot. Binance is slowly conquering the world, opening Fiat-to-Crypto exchanges on every continent, and Coinbase and Gemini are anxious to expand their offerings of cryptocurrency tokens. And let's not forget Circle's Poloniex acquisition which probably isn't sitting still either, or Huobi's expansion to the USA. The space is booming and exploding with all kinds of on-ramps for institutions and the general mainstream.
The Bitcoin ETF
At some point sooner or later the American SEC is going to come up with regulations and at least one of the ETF's is going to get approved eventually. It's not going to be anytime soon, and I have no reason to believe that the SEC is in any hurry to rush their decision. It is much more likely that they will wait as long as they can before making any kind of decision, in order to better understand the market and the implications of their regulations in the future. That being said, the world is moving on and I'm sure that the SEC realizes as well that the USA needs to get it's act together at some point or risk falling behind. The approval of an ETF could be a major driver in Bitcoin price action, and it seems like 2019 should be the year when we'll finally see the first.
The Bitcoin halving event in 2020 & Ethereum PoS
One of the major potential catalysts of a Bitcoin price increase is the so-called Bitcoin halving events, of which the next one is coming up sometime in 2020. While this still feels like a long time away, I believe the market tends to react pro-actively to these events. I believe that sometime mid-2019 the first people are going to start FOMO'ing in because of this, trying to stay ahead of the pack.Similarly, Ethereum's constantinople upgrade will downgrade the ETH block rewards from 3 to 2, which isn't quite the same as the 50% reduction in Bitcoin but 33% is no small matter either. More importantly to the Ethereum network is the arrival of Proof-of-Stake, which could in fact change the tokenomics of Ethereum completely and cause a run on ETH for staking purposes - who doesn't like ETH dividends on their holdings?
Major projects are coming online
Besides Bitcoin I believe we will see a lot of action in altcoins as well. Not just will some of them benefit from being added to major existing exchanges such as Coinbase, but we will also see significant changes in the market because some of them will start delivering on their promises. I'm most anxiously awaiting the effect of the Brave Browser and the Basic Attention Token, of which the 'get paid to surf the web' feature should go live sometime in the next year. I see this as one of the catalysts that can potentially get the mainstream crowd involved with crypto, and actually own and use crypto without going through the hassle of purchasing it - it will simply appear upon usage, and with a monetary incentive to use the browser it's not a hard sell to make. But there are many other projects too, like OmiseGO which is set to deliver some important milestones in 2019, or 0x on which a great deal of serious companies (like Bitfinex's Ethfinex) are building DEXes. For the first time it won't just be speculation, but we'll see some actual adoption and usage (at least... fingers crossed!)
The stars are lining up, and by 2019 so will the charts
It's hard to make predictions on the market, but if you've been following my blog you know that I'm still bearish on Bitcoin in for the mid-term. I still think we need to bottom out and we will go lower from where we are today. However, the good news is that I also expect the true bottom to be hit sometime in 2019, which will be the start of the next bull-run. My personal prediction is that we'll see it happen sometime in the spring, but that it might take until autumn before it becomes apparant that the spring bottom was the true bottom in the market. I think it is fair to predict a new bull-run sometime in Q2 or Q3 of 2019 based on the charts.
And this just so happens to coincide with a variety of factors that I listed above. While trading desks are looking to get started as soon as possible, regulations are coming, ETFs might get approved, in reality it is all going to take a few months before their effects will be felt by the market. Regardless, anyone who investigates the crypto space and what's going on inside it will be hard pressed to call it a bear market in terms of eco-system developments, because the space is exploding and about to get a whole lot bigger from what I can tell.
Here's to hoping for a crypto-spring-revival!
