FXM Capital & Cryptocurrencies in 2019. What to Expect?

Bitcoin has experienced quite the journey since its inception in Satoshi Nakamoto’s 2008 white paper. While it has certainly become a mainstream financial instrument, revolutionizing how we think about money, it continues to surprise us with its unstable behavior on the market. Now that there are thousands of altcoins in circulation on top of all things, significantly greater efforts are required to foresee the future of thousands of assets in the ever-evolving cryptocurrency market. Therefore, you need to take into account the multitude of factors underlying this future. The market is still expected to change several more times as it matures. All this makes cryptocurrencies significantly more volatile compared to other assets. However, make a few right choices and you will be swimming in cash before you know it. Trading with crypto is easier than ever, especially when there are brokers like FXM Capital around, so why should you keep faith in crypto when everyone else seems to be calling quits?

What will happen to cryptocurrencies in 2019?

Few things are less predictable than cryptocurrency markets. This is especially evident in the journey from 2016 to 2018. Many people forget that on the road from $1800 to $19,000, there were as many bitcoin pessimists as there were optimists. Now, ever since it reached its peak, every drop in the cost of Bitcoin is accompanied by claims that the end has come, and that there is no future ahead of it. In order to soberly assess the situation in the cryptocurrency market, you need to drop all the hype that accompanies it and take look at the facts. Here are a few forecasts for cryptocurrencies in 2019 based on some observable trends.

Cryptocurrencies in 2019: What to Expect 1

1. The gaming industry will adopt blockchain technology

Blockchain games that use tokens as an in-game currency is just one of the ways in which crypto is entering this huge, profitable sector. Blockchain has the opportunity to give the gaming industry something it was lacking for a long time — stability. Considering every few weeks a scandal about data leaks takes shape, this is a long-awaited change. This is especially important in the gambling business since it is located at the junction of big money and human emotions. Other innovative companies are creating decentralized markets where items from a variety of online games can be bought and sold for cryptocurrency. Long development cycles for these projects mean that their full-scale launch will likely take place in 2019.

2. Retailers will start accepting cryptocurrency

The new partnership between Microsoft, Starbucks, and ICE (International Exchange) is one of the signs that retailers are beginning to accept cryptocurrency as a simple payment method. Other businesses will soon see the benefits that Starbucks receives when customers pay for products with cryptocurrency using newer, faster infrastructure, which wasn’t there last year. This day and age, denying payments via cryptocurrencies would be to deny potential opportunities to boost income, especially when a growing number of people are starting to choose cryptocurrencies as their preferred method of payment. In the same way that a shop that accepts credit cards presents more options to consumers and potentially increases profits, a shop that accepts cryptocurrencies can also significantly broaden their reach on the market, which is inevitably what everyone will start doing sooner or later.

3. The market will calm down

Next year it is expected that the market will calm down by a bit, and this will partly happen because of the dynamics after the bubble. Trading in cryptocurrencies will remain as profitable as it was, even if the value of coins’ decreases. For example, companies like Coinbase can earn hundreds of millions of dollars even during the biggest recessions of all time. Many companies are also seeking to conquer markets that are still young and in their formation period with AI, predictive analytics, and valuation tools that tighten spreads and help assets naturally determine prices.

4. Banks will place bets on cryptocurrencies

2019 might very well be one of the biggest years for the banking industry. The biggest year of change that is. Considering that the general reputation of banks can be described as shady, uncooperative, and greedy, a huge demand has been created for consumer-friendly solutions that are easier and cleaner. Cryptocurrencies have the potential to fill in the gaps that were left open by the current financial establishments. Ripple is one of the biggest names uniting blockchain with the world of finance. The company added several international banks to the pilot program and proved that the use of cryptocurrency will save these banks millions in expenses. Although it will probably not be in the form that speculators would prefer it to be, banks in 2019 will likely invest much more money into cryptocurrency projects.

Cryptocurrencies in 2019: What to Expect 2

5. Security Tokens will become more popular

With recent statements by the SEC that some cryptocurrencies will be considered securities, many believe that security tokens (investment tokens) will be part of the next gold rush. Tokenized stocks in sectors like real estate, classic cars, vintage wine, and art will be available through regular channels. The higher cost-effectiveness of this model will make these assets easily accessible to retailers and will create a richer choice of potential investments for everyone. They are called security tokens for a reason, as they have to be backed up by some tangible asset such as the company’s shares or profits. On the other hand, ICO’s and coins usually amount to nothing more than false promises.

STO’s actually require that they are approved by the SEC and other various regulatory bodies, meaning security tokens possess the protection and features of regular assets while also leveraging the benefits of their digital nature. Practically any kind of physical asset, be it a boat, real estate, or equity, can be tokenized, and used in order to back up a security coin. In the years ahead, this sector has one of the biggest potentials to explode.

6. The rise of decentralized exchanges

As of today, centralized platforms dominate the world of cryptocurrency, and the leaders among them are Binance, OKEx, and Huobi. According to statistics, 98% of all deals are made on centralized sites, while only 2% are decentralized. Centralized sites are in demand, and everyone is well aware of that. Are there any downsides though? Commission. Decentralized sites do not have them at all, or they are significantly smaller than those of centralized ones.

Centralized exchanges can be hacked, charge you fees, and require a lot of time. This makes them increasingly difficult to work with considering the decentralized alternatives. Although the first decentralized exchanges were slow, and they lacked liquidity, projects such as the Kyber Network helped solve this problem. Decentralized exchanges are now liquid, and users are using the opportunity to manage their wallets’ private keys. As the ecosystem improves, it is expected that these exchanges will become increasingly popular and demand will rise.

7. The revival of anonymous coins

The government, social networks, messengers, anyone with some knowledge can easily look into your personal life. That is why we need privacy, and in particular, anonymous cryptocurrencies. In times of change, especially nowadays, obsolete beliefs and ideas about the blockchain are challenged by new ones, and outdated, but still relevant platforms return to former popularity. Anonymous coins have a unique, modern purpose, which will always be in demand, especially when it was proven that cryptocurrencies such as Bitcoin can be tracked.

Without a doubt, developers of these anonymous blockchains will always have many supporters. Now, and in the future. Moreover, while their potential is not fully revealed yet, speculations are enough to know which way this is going and why you should be part of the movement. Developers are looking for and finding new application mechanisms and implementing more and more advanced solutions to ensure the safety and privacy of users.

Thus, the future of anonymous coins is guaranteed, and an increase in value is quite likely. Without a doubt, having a few anonymous coins in your crypto portfolio is the right and reasonable decision.

8. First cryptocurrency ETF

Bitcoin is the best candidate for the world’s first cryptocurrency ETF (Stock Exchange Investment Fund), which will increase its availability to institutional and retail investors and, in turn, directly affect the cost. This cannot be said for futures or other derivatives. Many companies approached the SEC about creating their own Bitcoin ETF, but their bids were rejected one after another. Analysts expect the first Bitcoin ETF to be approved by February 2019.

Bitcoin has long been associated with a full-fledged means of payment. In fact, its main competitor is real money. For a long time, the lack of regulation and the associated criticism put serious pressure on the value of all digital currencies. Now, however, international criteria for regulation is being developed, and the more protected it becomes, the more trust it earns. As soon as regulatory issues are finally solved, hundreds of billions of dollars from investment funds are going to enter the market. Why haven’t they done it before? The reason is simple — investors do not have the opportunity to work with assets outside the regulated space. Therefore, the launch of an ETF fund on the basis of the largest options exchange will make investing in cryptocurrency a legitimate option for institutional investors.

9. Decentralized applications will become more popular

CryptoKitties was the first example of a decentralized application that gained popularity in wide circles. Although it is also an excellent example of how difficult it is to scale up a blockchain, projects such as Ethereum’s Casper will help overcome such difficulties. This new breed of decentralized applications based on the new blockchain technology has opened up the doors to a new and exciting world. While summarizing what a DApp is in a few sentences is practically unreal, the list below is a representation of the criteria for one. Even if one criterion is absent, then it is not a decentralized application anymore.

1. Decentralized — Cryptographic technology is involved, such as blockchain.

2. Incentive — In order to fuel itself, the app has digital assets/ crypto-tokens.

3. Open Source — Available to all, the source code of the app is constantly improved.

4. Algorithm/Protocol — The app has an in-built consensus mechanism as well as the ability to generate new tokens.

10. The market will grow

The fact that the prediction is easy to do does not mean that it is less likely to do turn out true. The cryptocurrency market will continue to grow in 2019. Even now, the price of most cryptocurrencies is still growing compared to last year, and given the decadent market sentiment due to the “bursting cryptocurrency bubble”, digital currencies have sufficient excess stock. Despite the downtrend in 2018 so far, the forecast for cryptocurrency for 2019 is quite favorable. This thinking is associated with the expectation of the adoption of reasonable restrictions on ICO’s and cryptocurrencies. This will make investing in digital assets legal and more secure, which will attract the attention of large investors to the industry. In the meantime, institutional players in their majority are still wary of the industry. 2018 showed that there are many frauds and unjustified hype on the crypto market. Rational regulation will eliminate the main problems in this sector, making it more attractive to investors.

What does the future of crypto hold?

Nowadays, the threshold of entry into the market is considered favorable since the price for many coins has sunk heavily. In a declining market, you can opt to invest in promising altcoins which should soon release their finished products, and ensure market growth in the future. Nevertheless, you need to understand that the existing forecasts remain only forecasts. All investments need to be approached with extreme cautionю and Remember, that digital assets aren’t just associated with high risks for no reason. Promises of quick profits come with a high probability of losing all investments.

There are many obstacles to making accurate long-term forecasts:

· The crypto sector is young, lacks regulation and is highly susceptible to speculation;

· There is a big correlation between the cost of tokens and the actions of the company’s managers, representatives, and development team;

· The lack of a fully developed mechanism for regulating the industry, making the market less predictable and riskier for large investments.

Fortunately, the cryptocurrency industry is maturing, and most of the causes for high volatility that were relevant before are slowly becoming irrelevant, and even disappearing altogether, making digital assets more reliable with time and a significantly more convenient financial instrument.

Written by

FXM Capital - Head of Business Development - https://fxmcapital.com

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