It has been an eventful 2019 for the cryptocurrency market. From a total market capitalisation of $127 billion on January 1, 2019, the market surged to $386 billion in June 2019. Traders breathed a sigh of relief as the market finally ended a long crypto winter. On the other hand, enterprise blockchains achieved so much maturity. The largest cloud providers like Microsoft Azure and Amazon Web Services (AWS), became huge drivers for Blockchain-as-a-Service (BaaS) models.
Central Banks and US Congress are finally giving importance to digital assets and uses of blockchain technology. A new breed of coins called “stablecoins” have entered into the scene, which might offer solutions to crypto volatility issues. The year also saw a number of improvements and deployments in network scalability and security, of established coins like Ethereum and Litecoin.
All in all, this was a fruitful year for the industry. As we venture into the New Year, let’s take a look at some viable crypto investments that might be good for a trader’s portfolio.
Bitcoin remains one of the viable long-term investments for 2020. The uncertainty around Brexit and the US-China trade war is expected to hurt global economy. The US Presidential impeachment proceedings in the Senate and the elections in 2020 could usher in market volatility. Major statistical bodies and financial institutions, like the IMF and OECD, have already reduced global growth projections. In such a climate of economic and political instability, investors might flock towards BTC as a safe haven asset, which would drive its value up.
Another significant event to watch out for is the Bitcoin halving in May 2020. This will be the third time when the number of Bitcoins rewarded for successful mining activities will be lowered; this time from 12.5 to 6.25. Bitcoin’s supply is limited to 21 million units. This is different from fiat currencies, which can be printed additionally by Central Banks.
Bitcoin’s deflationary model means that scarcity in its supply will increase its value. In May 2020, the halving event could lead to a surge in BTC prices. Moreover, in 2020, an increased number of applications and channels are expected to be built on its Lightning Network, leading to more companies using the Bitcoin ecosystem as a base.
2020 is expected to bring in significant developments in the “DeFi” or Decentralized Finance ecosystems. Companies building Open Finance platforms on the Ethereum blockchain gathered a lot of interest in the Venture Capital (VC) space in 2019. Approximately $685 million worth of investments are locked into the DeFi ecosystem as of December 5, 2019. This investment trend is expected to continue. The Ethereum blockchain, as a result could gather significant value in 2020.
The newly proposed Ethereum 2.0 network upgrade will make it more popular among enterprise blockchain seekers. For instance, Ethereum 2.0 will have 64 shards, once fully deployed. These “shards” or partitions will operate simultaneously with independent transactions, making the network extremely fast and scalable. All such developments, including changes to the Proof-of-Stake protocol and Plasma, will continue to enhance its appeal as the go-to smart contracts platform.
The dollar-backed Tether could make it big in 2020, owing to the strong interest in stablecoins. These coins are actually much like tokenised fiat currencies, although they can be backed by various real-world assets as well. They are being considered as possible solutions to the high crypto volatility, which hampers adoption for day to day usage.
Tether claims 97% market share of all stable coins in the market currently. In 2019, Tether increased its supply from 2 billion tokens to above 4 billion tokens. It also moved to the Ethereum network, making it easier to be transferred and adopted by many exchanges. Thanks to that, it is now spreading across the crypto-to-crypto markets, helping traders avoid fiat markets volatility. They can avoid converting cryptos back to fiat, before converting them again into another crypto for trading.
In a way, USDT facilitates arbitrage as well. Tether is currently the fourth largest cryptocurrency in the market, with a price of $1.01 as of December 21, 2019. Experts expect its price could reach $1.60 in 2020.
The BNB coin fuels transactions on the Binance exchange. By offering trading fees at various discounts, the coin makes the platform attractive for users. BNB has been one of the top-performing crypto assets, ending 2019 154% higher. As of December 21, 2019, it is trading at $13.48, with a market capitalisation of $2 billion. The functionality of this coin is not restricted to the exchange anymore. It is used in IEOs (Initial Exchange Offering) and powers many merchant payment platforms too. In 2020, many new users are expected to come on the Binance exchange, raising the coin’s utility and price.
Despite many controversies surrounding Ripple’s centralised structure, it remains a strong investment case in the crypto industry. Its real-time cross-border payments network has seen a steep adoption curve through the years. Major banking institutions and payments networks like MoneyGram, Santander and Euro Exim Bank use it.
Ripple’s CEO, Garlinghouse, predicts that in 2020, the top 20 banks in the world will actively hold and trade in digital assets. Mobile payments will also be on the rise. Ripple’s XRapid solution is poised to enable frictionless cross-border payments in times of crisis, like the Brexit transitory phase, when transactions across Europe and the UK will become expensive.
As more financial institutions join the company’s client list, the value of XRP could surge. As of December 21, 2019, it is trading at $0.19, but experts predict that its value will rise to $0.38 by December 2020.
The cryptocurrency markets are highly volatile. Traders should consider using technical tools and studying the complete market fundamentals, before making a decision. Overall, the blockchain space promises to be an exciting one in future years. As fiat-based economies lose ground, these coins could become quite valuable.