Crypto market has always been a good target for speculation, shady schemes, and "bad guys". It's also very controversial, especially for financial markets that still try to figure out what crypto really means for them. All this and many other factors result in serious pitfalls and uncertainty, the crypto market is well-known for.
Although it's very unlikely to handle the crypto market in 2020, this year is a promising one in terms of bringing some important changes that will help the new asset and clarify how it might become a main feature in the future of financial systems.
For a better understanding of what to expect in the rest of 2020, here’s a top-5 rating of the main trends and tendencies on the crypto market that are just starting to evolve.
Halving is the process of cutting the number of bitcoins given for successful mining a block in the ledger by half. Although it sounds like bad news, it’s what had already happened twice before. After both events, the prices started acting notably interesting. In 2012, the bitcoin price rose from less than $10 to more than $100. Then, in 2016, the currency rose from $400 before the halving to more than twice that amount by the new year.
The halving is what helps stabilize the supply of bitcoins before it approaches full saturation. So that there are no more bitcoins to be mined. After that, bitcoins may either become more valuable than gold, or lose value to more abundant or practical digital currencies, like Bitcoin Cash. Still, it's important to define if it's only the scarcity that defines its value.
Libra is the stablecoin which Facebook announced as its own cryptocurrency earlier this year. There are already lots of debates around this new stablecoin. Still, it has the support of Uber, Vodafone, Coinbase, etc. Some of these uncertainties prompted other interested parties like Mastercard, eBay, and Paypal Holdings to decline the use of this cryptocurrency altogether.
Still, Libra is estimated to have a potential user base of nearly 170 million in the United States alone. Thanks to Facebook, the adoption of libra and its associated Calibra wallet will mean that the social network users, many of whom have never dealt with cryptocurrencies, might suddenly start paying Uber drivers with the Libra.
Depending on how well the Libra model is adopted, it could well point out the moment at which cryptocurrency can go mainstream that other tech and finance companies will definitely follow.
The government interruption
2019 showed an increasing awareness on the part of federal agencies that cryptocurrency and the overall technology is about to become more of the core element of society.
Now, the cryptocurrency industry will likely see local and national governments pay more attention to the digital currencies.
The market consolidates
Uncertainty might be the main feature of the cryptocurrency market. Despite flattening in 2018, as the price of bitcoin fell, the number of cryptocurrencies in the market grew to more than 2,300 through 2019, according to the latest accounts.
Fewer than a third of coins trade more than $100,000 of volume in a day. At the same time, more than a third are valued at less than a penny. As a consequence, there are more coins in the cryptocurrency market now than ever, but the total amount of capital has flatlined throughout 2019.
While a potential growth in cryptocurrency interest from mainstream finance might result in an increase of capital, it’s unlikely to reach the smallest coins. As greater uncertainty comes to the market, regulatory burdens and greater transparency between the large players will probably root out those just trying to make a "quick coin". The market has probably reached a saturation point, and the number of available coins is unlikely to grow in 2020.
Crypto and fintech hook up
Cryptocurrency is increasing its popularity and finally, there’s some evidence of companies and people actually using it.
This necessity of innovation has been a real trend throughout major areas of the cryptocurrency market. Libra itself can still be stacked with members from various fintech companies. Meanwhile, fintech Plaid and Chime have reached their valuations largely from investments by companies like Visa and Goldman Sachs Group that are curious about digital assets, but afraid of the uncertainty that surrounds them.
The point is 2020 will be a win-or-lose moment for cryptocurrency. Either coins start to prove their merit, or they will start to disappear.