It might be slightly early to issue a prediction for 2019, but we see it as a timely guide as we anticipate the upcoming bull-run. While numerous pundits have called for a market recovery by the middle of October, it doesn’t seem like that market is heading anywhere soon, even as we enter November. However, it is worth noting that Bitcoin prices have been holding steady (and at days barely moving) around US$6500 range. It can only serve as a reminder that the markets are entirely possible to be manipulated by “whales”.
That said, we believe that the broader industry developments (globally) will eventually lead towards a rather “bullish” trend, which could culminate in 2019 being a very good year for investors, regardless what the “whales” try to do. Here’s what we think might happen. However, please don’t take this piece as investment advice.
Further consolidation of crypto exchanges
It’s probably not the first time we mentioned about further consolidation of cryptocurrency exchanges. Exchanges which were largely popular just a handful of years ago have been bought and sold: Poloniex to Goldman Sachs-funded Circle, BitStamp to a South Korean gaming company, and many more.
The truth is, liquidity have become a massive issue for exchanges to maintain; because let’s face it – traders will not trade without volume. The markets today are still largely driven by traders rather than real use cases (except if we talk about Bitcoin, Litecoin, Ethereum, etc). As exchanges rely mainly on high trade volume to make a living, traders do hold quite a sway in determining who comes out as the winner. Traditionally, exchanges have relied on listing fees (from ICO projects), but with this “practice” in question since Binance decided to donate away their listing fees, more exchanges will end up failing.
If lack of volume, and increased price competition is helping to consolidate the industry, let’s also not forget to add the fact that hacking of customers’ funds have been increasingly rampant. Securing clients’ funds have become extremely expensive for exchanges who want to stay in business. Already, there’s a growing trend – exchanges who get hacked, often cannot survive the second incident, thus increasing the odds of these exchanges being sold, or merged with other players. Further consolidation in 2019, is probably inevitable.
Bitcoin hits US$100,000 finally
While many predicted for Bitcoin to hit US$100,000 by the end of 2018, that prediction fizzled when Bitcoin precipitously fell from US$20,000 to below US$6,000 at one point. We have previously written that the price surge would happen when we least expect it. In general, the market is still largely positive on Bitcoin’s potential. So much so that, large players have been quietly collecting Bitcoin at current prices. However, this is happening under the radar, and outside of exchanges to avoid moving the prices.
It is worth noting that the market has been flushed with positive major announcements (NYSE’s BAKKT will offer futures trading soon, and Harvard, Stanford and MIT endowment funds have begun investing into crypto) recently but still, it hasn’t moved. This brought us to believe that the markets are probably waiting for when US regulators approve the establishment of Exchange Traded Funds (ETFs) using Bitcoin as the underlying asset. When this happens, US$100,000 will no longer be a pipe dream. Let’s wait and see.
ICOs replaced by STOs
Coinsauce has written quite extensively about Initial Coin Offerings (ICOs), and we have also called for it to be replaced by Securities Token Offerings (STOs). In the past months or so, there has been little doubt that ICOs have failed to raise most of the money they have been asking for. Coupled with massive failure of most ICO projects (where more than 90% of the ICOs have their token prices traded way below their initial offering), it is not only us who’s calling for its death.
While the market demand for STOs is still largely unknown, we believe it is the next logical step in the ICO evolution. As regulatory approval is needed for exchanges to start offering securities tokens for trading – it might take more time, but will probably happen in 2019. As such, we believe that as the broader rises without STOs being ready, it will lead to our next prediction coming true.
Masternode (POS) projects go into the mainstream
Proof of stake (POS) mining is not a new concept. Infact, you might be familiar with Dash, a popular cryptocurrency token. We believe that Masternode tokens, as they are called, will make a comeback as the number of projects are steadily growing, even in 2018. The industry is largely ignored, but they are closely knit. It is not uncommon for developers of one project to start another project after, and for investors who invested into their previous projects to just reinvest into other projects that these developers launch later.
Coinsauce believes that Masternode projects will go into the mainstream because investors who previously got burned in ICOs want a faster exit – in terms of recurring income, and faster project turnaround time; which Masternode projects are known for. As STOs are not yet mainstream, this market segment might just blow-up in a huge way. While we openly admit that, these projects do raise smaller amounts of money (US$100,000 is considered huge), and are riddled with scams, but we think this will change as the industry grows, and more solutions are introduced to avoid scams. You can read more about it here.
Decentralized projects become more popular – introduction of DEX etc
If you are exposed to the masternode community and projects, perhaps the idea of a decentralized ecosystem. Established players such as CryptoBridge (a popular masternode tokens decentralized exchange) have long occupied the space, and played a huge role in the community. They offer a safe space where tokens can be traded in a risk-free platform, without the need to attain huge “trading volume” requirements forced on many projects by established exchanges.
By 2019, we expect to see decentralized exchanges to start picking up more traction, and even funding. While the idea of decentralized applications (dApps) have not really shown desirable results, this could change in the near future, as faster, more efficient blockchain technology gets rolled out. As such, we might advise our readers to watch for companies who are already in this space such as EOS. For dApps to work, our opinion is that it first has to work as well as apps on our smartphones.
As big boys (such as Binance) are taking actions to decentralize their exchange in a bid to avoid governments’ long arms and unfriendly regulations, we believe this is a trend to watch out for. Infact, their move has possibly sealed the direction for the industry. Many claim potentially huge benefits, such as shifting the burden (and risk) of holding the customers’ funds away from the exchange, and guaranteeing access to almost anyone who wants to participate – but, it is clear as crystal that decentralization actually leads to increased efficiency and profits. As an investor, that’s interesting.
Ethereum prices recovers to above US$800
We have previously discussed about Ethereum hitting all-time lows, and we genuinely think it has potential. Yes, there’s no shortage of calls for demise of Ethereum. However, if one actually closely study the team behind Ethereum, they have a successful track record. Whether we admit it or not, upgrading a piece of technology such as Ethereum is not an easy feat.
One does not have to go for to look for examples of “failure of delivery” in the industry. Even the team behind Lightning Network’s bid to help Bitcoin scale has been largely behind in terms of schedule. Due to this, Bitcoin is still largely fraught with high costs and relatively long transaction time. So, it might be largely fair to say that Ethereum is undervalued at this moment, when comparing to Bitcoin, due to same set of circumstances.
Indeed, no one’s arguing that Ethereum’s massive rise was due to the massive wave of ICOs – which has seen a large decline entering the fourth quarter of 2018. However, if STOs are going anywhere, it still has to rely on Ethereum’s smart contract capabilities. It’s again just a matter of “parking assets” under the contract, which some might argue. Is it doable? YES. Thus, these are the reasons we think Ethereum has one way to go, but up.
Tether no longer the king of stablecoins
Since our last entry on Tether’s possible collapse, the self-proclaimed stablecoin had again reached parity with the US Dollar, but not before burning through millions of tokens due to massive “cash out” by holders (even traders). This was not unexpected, as we previously mentioned that a stablecoin’s value is based on TRUST. The market simply lost trust in Tether. During this time, other stablecoins have entered the market, and gained considerable traction.
We are of the opinion that there’s a huge possibility that Tether will be dethroned as soon as 2019, because other exchanges have the innate need to want to own and control their own stablecoin. As Bitfinex’s dominance is under fire currently, and the exchange space is becoming increasingly crowded (and squeezed for profits), it may lose its grip on Tether eventually.
Facebook and Twitter blockchain equivalents see significant traction
The popularity of the current kingpins of social media may be on the decline amongst the younger generation, but their profits certainly aren’t. However, they aren’t helping themselves with the slew of ban on user accounts as well as reported data hacks; leaving the community with a bitter taste in the mouth – questioning if they should continue to trust these giants with personal data, and the trust that they would uphold personal liberties (and freedom of speech).
Coinsauce believes that there’s no shortage of companies working on micropayment solutions for content, and these developments could turn the table on Facebook and Twitter. Solving the problem of micropayments for content producers will not only give blockchain-based social media platforms an edge, it also is an important capability. Let’s face it – content creators these days are no longer taking in as much as they used to.
Already, popular platforms such as Steemit and D.tube have garnered millions of users, with the promise that the users can earn more money that conventional platforms, and the users are buying it! We expect to see blockchain equivalents to Facebook and Twitter recording significant traction in 2019 – perhaps outpacing them altogether.
Traditional VCs and banks to enter blockchain in a massive wave – expect crazier valuation for crypto-based businesses
To give some background and insights about the crypto industry in 2018; we already saw Bitmain (crypto mining and equipment manufacturer based in China) being valued at US$15 billion. Binance, probably the biggest cryptocurrency exchange in the world, recorded US$1 billion in profits during the first 9 months of operations.
Our prediction is that in 2019, blockchain-powered startups will see an even more massive valuation placed on its head. The reason? Take Bytedance for example. In 2018, it saw a US$75 Billion valuation placed on its head, for simply producing the most popular video streaming app in recent history. The tech and startup industry had reached its peak at the current rate. Big players are now moving upstream and downstream. For example, WeWork which rents out coworking spaces have now made moves to acquire the buildings they occupy, effectively putting them in the property business.
Uber has also decided to enter the jobs industry by offering on demand staffing, instead of just focusing on food and transportation. In order of these big boys to grow further and justify their sky-high valuation, they need another story to spin. Most logically, it should be blockchain. We will not be surprised if a major tech player suddenly became a blockchain company in 2019. We will also put our bets in the hat now and predict that a relatively unheard-of company in the blockchain industry will attain a sky-high valuation in 2019 – backed by a major VC or financial institution.
China allows exchanges to come back
Many investors were utterly disappointed when Chinese regulators decided to call for a ban on ICO (and cryptocurrency trading) this year. Many experts pointed out that this action was taken due to the lack of understanding (amongst investors), and the relative lack of maturity in the markets. However, Coinsauce believes that there’s a possibility that China finally brings back this industry to its folds as soon as 2019.
Simply put, this industry creates many jobs and attracts a lot of money to its shores. Sure, the Asian region is still seeing its regulators bumbling to find suitable regulations in which the crypto industry can be regulated, but 2019 is what we believe to be the decisive year, especially when most regulators take heed from their US and European counterparts. With SEC approval for a Bitcoin ETF expected in 2019, we can see perhaps expect many countries possibly following suit with friendlier regulations, despite current rulings. Surely China doesn’t want to lose out to its Asian counterparts who are fast embracing cryptocurrency and its industry, especially its “arch-rival” Taiwan, Singapore and even Japan.
Rocket Internet by training, he has worked as a professional marketer for Lazada/Alibaba & Bamilo (Ecommerce) and Easy (Transportation). Later, he honed his skills in operations, logistics, and management by launching and growing the Thai business (worth tens of millions) of a popular cross-border ecommerce platform (in Southeast Asia). Headhunted to join a public-listed tech company in Singapore, he led its Thai business until early 2018. Regarded as a trusted advisor by venture builders, Chong spends his time advising and investing into tech and crypto projects.