Over the last couple of years, the digital currency market has been shaped by a number of trends, which influenced the adoption, volatility, regulation, and development of new coins. Staying up-to-date with the upcoming crypto trends is bound to have a great deal of benefits, as users can better predict future market updates, thus allowing them to make smarter investment decisions.
Without any further ado, this article will focus on highlighting some of the main cryptocurrency trends you may expect to see in 2020. The opinions outlined below belong to a number of popular market experts, analysts, and investors.
Digital currencies ARE the trend
Jonathan Swerdlow (Enigma Securities) stated that cryptocurrency itself represents one of the main trends for the year 2020. This opinion is based on the idea that recent advancements have increased the overall popularity of most coins, which are now easier to use but also accepted as a means of payment by more industries.
Additionally, 2020 will likely bring the first real-world implementations of central bank-backed digital currencies, commonly referred to as CBDCs. Reports indicate that China is bound to launch a digital version of the Yuan sometime in 2020. A similar event is likely to occur by the end of the year in Turkey as well. At this point in time, beta testing is already being carried out in mainland China.
It’s important to keep in mind that numerous central banks worldwide are currently researching the advantages, disadvantages and overall market opportunities associated with CBDCs. Therefore, if the initial implementations prove useful, CBDCs will likely become a part of the global economy during this decade.
Relevant changes in the methodology of fintech products
According to Alexey Ermakov (Aximetria), the development of financial technology-based products and services will accelerate during this year. As such, it is very likely that we will notice a shift in the methodology of fintech product innovation, as developers proceed to invest more time into developing products that feature great UX and maximum usability.
Cryptocurrency trading sees increased regulation and institutional investor interest
In a recent statement concerning the future of the crypto market in 2020, Charles Phan (Interdax) mentioned that users can expect to notice increased trading activity from institutional investors, alongside an overall volume growth in terms of derivatives markets.
With this in mind, the increased volume is reported weekly on the Bakkt bitcoin futures exchange. This trend will likely be present throughout 2020, especially since Bakkt has announced the introduction of cash-settled futures (these will likely serve to complement futures that are covered in physical assets). Overall, more sophisticated crypto-related investment tools are likely to be introduced during 2020.
It’s also expected that state authorities will continue their efforts of creating an all-inclusive regulatory framework. A relevant example in this scenario is the introduction of rules by the Financial Action Task Force (FATF). For instance, recommendation no. 15 will make it mandatory for cryptocurrency exchanges to collect extra information concerning their user base and afferent transactions.
Worldwide adoption of these rules is likely to lead to a delisting of privacy-conscious digital currencies, as it is the case with South Korean exchanges. Reports indicate that countries worldwide must implement this recommendation by June 2020. A review of the ‘travel rule’ is also required before the same deadline. Of course, legal workarounds to such rules are available, and privacy-focused coins will not disappear – on the contrary.
Facebook will launch the Libra Coin
According to Edith Muthoni (Learnbonds), Facebook’s Libra announcement has taken the crypto market by storm, thus causing a significant impact in terms of trading volumes and overall digital currency usage worldwide.
While it is difficult to predict whether Libra will be successful (especially if we consider the recent controversies surrounding the coin), it is likely that Libra will heavily-stimulate the crypto market, as it proceeds to introduce 1/3 of the world to digital currencies. Thus, the coin value is bound to bloat.
Bitcoin’s next halving event is right around the corner
Every few years, the bitcoin block reward given to miners is halved in order to facilitate an increase in the demand of the cryptocurrency. According to David Steen (Morgan Hill Partners), analyses of past halving events have shown that a price increase is bound to occur after each halving. At this point in time, it’s well-known that a BTC price increase leads to a positive value ripple for most digital currencies.
As such, we can all agree on the fact that 2020 represents a critical year for the future of the bitcoin price. The halving in May will likely encourage the occurrence of a huge bull uptrend, thus leading to new record-highs. In fact, technical analysts suggest thresholds as high as $50,000 -$250,000 by considering past growth cycles fuelled by halving events.
However, bitcoin may have reached a higher degree of maturity, thus lowering the chances of such price increases. It is believed that the evolution of the price until the halving event is assured to foreshadow the short-term future of the BTC value. A weak reaction before the halving may suggest a long-term bear market.
Friendly regulations may boost crypto adoption
Luckily, governments throughout the world are seeing the potential in digital currencies, and are therefore drafting crypto-friendly regulatory frameworks. According to Mitesh Shah (Omnia Markets), there’s a trend in this sense, and it is bound to encourage an industry boom and positive price volatility.
A combination between positive regulations and some of the other cryptocurrency trends that are highlighted in this article will likely boost the market to new levels. This will surely be the case as long as scalability problems are solved, thus increasing the number of crypto transactions that can be processed every day.
Upcoming innovations in the entertainment industry
Crypto and blockchain technology integrations are suitable for virtually all markets. So far, the entertainment and media industries have only seen a sneak peek of what this technology is capable of. As such, according to Nikita Akimov (Eristica), 2020 will likely bring about the integration of cryptocurrency with the media and entertainment markets, thus encouraging the start of global mass-adoption.
Heavy-focus is being placed on achieving crypto and blockchain scalability
Mass adoption can only be achieved through scalability. This concept entails that blockchain networks should be able to support tens of millions of daily transactions, just like debit cards and other online payment platforms. So far, the scaling problem has affected the evolution of Bitcoin, Ethereum and numerous other decentralized cryptocurrencies.
Luckily, developers are hard at work creating new protocols that can handle efficient scaling, such as the lightning network or sharding for Ethereum. According to Jimmy Nguyen (Bitcoin Association), in February 2020, Bitcoin SV (BSV) will push a Genesis protocol update, which will basically remove the default block cap associated with the currency, therefore allowing unlimited scaling.
A decrease in the popularity of ‘HODLING’ for profit purposes
A negative side of the crypto market is that community members throughout the world only purchased digital currencies for the purpose of diversifying their investment portfolio.
This encouraged the appearance of the HODL trend, where users would simply hold onto their coins for an indefinite amount of time, rather than using them, in hopes of profiting off increased prices. The HODL mentality alongside speculative trading has done some good for the market, but the real value of the cryptocurrency industry can only be achieved through real utility and usage.
Based on this, Jimmy Nguyen believes that an ‘earn and use’ digital economy will become a trend in 2020, as blockchain and crypto-related applications allow people to earn bitcoin, which can then be used on a day-to-day basis.
Based on everything that has been outlined so far, the crypto market will see some interesting trends in 2020. We can expect a higher value for our favorite coins, alongside the appearance of the mass-adoption trend, an actual utility for cryptocurrencies, standardized regulatory frameworks for consumer protection, smarter fintech products, extra investment options, central bank-backed digital currencies and more.
Which trends are you looking forward to the most?