This year will be one to forget for the majority of cryptocurrencies which are ending it lower than they began. 2020 could be fundamentally different though and here’s why.
A Brighter Future For Cryptocurrencies
Total crypto market capitalization is currently 50% higher than it was this time last year, however that is largely bitcoin’s doing. Most of the altcoins are actually trading lower than they were at the beginning of 2019 and the year will be one to forget for many of them.
There are several factors that could drive a revival and new highs in 2020 though. Economic concerns are growing and central banks are taking more extreme measures to avoid recession.
Negative interest rates and quantitative easing is putting massive pressure on financial markets and fiat is under threat of devaluation. Several countries have already suffered massive hyperinflation and people have turned to cryptocurrencies as a safe haven.
With a distortion in the value of assets investors may turn to riskier ones such as bitcoin. Additionally, stocks and real estate are at all-time highs while global debt is skyrocketing. The millennial generation will not want to get burnt so they may also turn to cryptocurrencies as observed by industry analysts.
Nearly half of millennials say they're likely to buy bitcoin.
Stocks and real estate are at all-time highs and interest rates are at all time lows. There's ~$250T in global debt that the last generation dined and dashed on.
Bitcoin is this generation's way to get ahead.
— Welson 📊 (@CryptoWelson) December 26, 2019
The US election could also play a part, as President Trump will do anything to keep stock markets pumped while negatively impacting global trade agreements in the name of protectionism.
The bitcoin halving narrative cannot be ignored, and a rally is likely to occur after the event. The reduction of inflation and the doubling of the stock to flow ratio are both bullish for bitcoin though there may be some negative impact on mining profitability.
Ethereum will also be going through the initial stages of a major consensus and network upgrade to proof of stake which will bring in new investment opportunities. Other tokens that have staking options have performed well this year so ETH may drive market momentum when Serenity finally starts to see the light of day.
There is a lot of pessimism in the crypto industry at the moment with search trends declining and interest generally waning as most cryptocurrencies are still down 90% from their peaks and have no liquidity. A new year could rejuvenate things as it has been two years now since the last bubble.
Institutional interest is growing all the time and while products such as futures do not necessarily provide a boost for prices they do increase awareness and adoption among those with deep pockets.
2019 has not been the greatest year for cryptocurrencies with most of them dumping all gains made. Only bitcoin and a handful of others have managed to survive but the outlook for 2020 seems much brighter all round.
Will cryptocurrency markets surge next year? Add your comments below.
Images via Shutterstock, Twitter @CryptoWelson