Unfortunately, we didn’t get the massive wave of crypto adoption that was supposed to lift Bitcoin to new heights. Can we hope for this to happen in 2019?
Bitcoin’s 10th birthday came as its value was down over 80 percent from its 2018 high. In the past decade, Bitcoin has overcome every downturn, only to drive the community to new levels. This current downturn, however, is more vicious than those that came before, and we are facing the abyss with more naysayers than ever betting big against BTC.
So what is different this time?
Let’s think of Bitcoin’s decade of growth as a four-stage relay race in which we had a slow start around 2008-2011. This phase is characterized by the anarchists who wanted to blow up the world and now account for roughly less than five percent of total wallets. This first wave established the first use case as a store of value and dominated the demand for BTC by true HODLers.
The anarchists passed the baton to the libertarians, who wanted to save the world with BTC, and I estimate they now amount to about 30 percent of all wallets. They joined quickly and supercharged the growth of BTC between 2012-2016. The libertarians tried to make a use case for BTC as a payment service in addition to a store of value, and they successfully passed the baton to the millions of speculators who came from fiat land to crypto land seeking riches.
Today, I estimate speculators account for over 60 percent of all wallets, and they are responsible for pushing BTC to all-time highs in 2018. Speculators had planned to pass the baton to the fourth racer – the global institutions, who were supposed to take us from here to infinity and beyond.
These institutions, instead of finishing the race as planned, dropped the baton by ‘not buying into the Bitcoin bubble‘ and even shorting the coin via the futures markets, which caused Bitcoin to drop by over 80 percent from its highs.
Out with the Old, in with the New
The big question for 2019 is: Will enough of these institutions cross the chasm and join us? Or will they continue to sit on the sidelines or even short the market?
Here are four reasons why I believe Bitcoin will recover big in 2019:
1) According to Bloomberg, the total number of retail accounts doubled in 2018 from 18 million to over 35 million, which indicates continued interest in Bitcoin despite the market downturn.
2) The volatility and trading volume of BTC tripled at the end of 2018, and we saw a big rush by institutions to cover their short positions. This hopefully indicates we reached the bottom and can expect a positive change in sentiment in the overall market.
3) There is a lot of good news lined up for 2019 which will drive new capital to Bitcoin as the safest cryptocurrency. This includes new ETF and ETN products.
4) A record number of institutions are onboarding with blockchain projects, which indicates a new wave of interest in Bitcoin and the opportunities the blockchain presents for Fintech. Crypto regulation from Washington will likely spur on the emergence of real-world decentralized blockchain applications which will shake up the status quo we have in the banking, insurance, and supply chain industries.
So out with the old, and in with the new. May 2019 be a bright year for everyone – it’s looking up for the crypto community.