Is $20,000 Bitcoin a Distant Memory?
A year in the blockchain and cryptocurrency space can be like ten years in the stock markets. A lot has happened since Bitcoin peaked, but the memories and euphoria that everyone involved with blockchain tech felt from 2016 to early 2018 are still remembered.
Digital assets and the ecosystem around them became overpriced and strained to cope with the waves of new users attempting to ride the height of the bull market. Exchanges could not cope under pressure, regulators were in disarray, and ICOs were generating millions of dollars tax-free with zero products or service to show for it.
Due to the severity of the current bear market, many have already fallen short or are beginning to struggle. Rumors of Bitmain selling vast amounts of Bitcoin Cash are all over social media, Ethereum Classic’s main development team shut down due to lack of funds, and the NEM Foundation is also struggling to stay afloat.
Bitcoin’s price is heavily influenced by the same supply and demand fundamentals gold possesses. The block rewards yielded to miners are cut by half roughly every four years, changing the rate of inflation.
Fundamentals: Unrealized and Growing!
While the majority of speculators have moved on to the next “big thing,” the ones left standing in the cryptocurrency space are building, learning, and moving forward, creating a new digital economy at scale.
The next uptrend in cryptocurrencies could reflect the huge shift into technology, making 2016 to early 2018 look like a test run!
Careers in blockchain technology offer bountiful salaries to those pioneering in computer science. Other industries involving airports, banks, and world-changing businesses are now ramping up their research and development in distributed ledger technology, A.I., and machine learning, all of which can be utilized in one singular digital economy.
Technology is an effective solution for solving congestion problems and creating smart cities, but also it can also be controversially used to avoid nation-crippling sanctions and drive wealth creation outside “traditional” channels. Iran, for example, is currently developing its own national cryptocurrency.
Financial institutions are building platforms that can securely handle cryptocurrency usage on a global level. Nasdaq, ICE, Google, and Soft Bank’s virtual exchange expose digital currencies to millions of new clients while removing the unregulated stigma attached to cryptocurrencies.
Not everyone in the crypto space wants big banks getting involved. A positive result of financial institutions is greater liquidity and volume, which have always been key for the growth and adoption of the cryptocurrency markets, which have had huge downturns in volume since early 2018.
This month, JPMorgan announced the creation of its own digital currency, JPM Coin, a digital currency created solely for JPMorgan’s clients using a blockchain similar to Ethereum’s protocol. Tokenized securities are another possibility of what is to come in the future.
Despite this being the longest bear market for digital assets so far, the underlying fundamentals are surging and problems that had been identified in 2017 are being addressed through off-chain solutions inspired by the creation of the Internet itself, pathing the way for an internet 2.0.
Similar to how the Internet impacts a variety of different industries, blockchain tech could also benefit from this flexibility. Although the dominant use case so far appears to be monetary-based, external use cases are being found and worked on.
Application-building blockchains like EOS and Ethereum have the potential to draw in capital from other disrupted industries (gaming, retail, etc.), further propelling the valuation of digital assets that are native to the protocol via utility or speculation.
Speculation and record levels in volume were key influences in 2017. Cryptocurrencies became hyped and rumors would trigger a frenzy of hype. This can easily happen again, as even in the depths of the current bear market, HOT and TRX experienced price rallies of over 50% in recent months…
The laws of each country vary, which plays a large role in the adoption of new technology and financial procedures.
Once authorities clarify their stances, another possibility is a global tax on digital assets. Due to their borderless nature and money-laundering issues, this is something being called for by G-20 countries.
Yet again, there is much more happening than a small post can describe. All of the above could slingshot the cryptocurrency market cap into the trillions in the right economic environment and cement it as a serious asset class in its own right.
This is not investment advice; please always do thorough research and only invest what you are willing to lose, especially in times of uncertainty.