The year 2019 is freshly behind us, which will surely be remembered by enthusiasts and observers of the crypto market. Both Bitcoin and his “younger cousins” provided us all with a good swing of moods. Considering previous years, the whole blockchain industry can be ideally compared to an adolescent teenager who is still experiencing his ups and downs.
Last year’s summary should start with the 1 January rate, which was 3700 dollars, but it is impossible not to go back to the last quarter of 2018. Since October (actually September) the price of digital gold has consolidated in the range of about 6000 – 6800 dollars. The graph took on an almost perfectly horizontal shape and put the investors awake in mid-November by the sudden earthquake. The course, like an avalanche falling from the mountains, rushed lower and lower bottoms. Many terrified Bitcoin owners at the time, seeing what was going on, got rid of them as soon as possible in order not to lose everything. After a month, it was time to count the losses. The price found its bottom at $3,200 (almost 50% decrease in a month). Many investors “died” (they left the marketplace), others bled out very much, and “shamans” reported further cataclysms. Eventually, in 2018, Bitcoin closed on the ceiling of $3,700 with a 75% loss, and entered 2019 uncertainly.
What is this about?
Investors who bought on the hills during the bubble, after a long period of uncertainty and losses, with time very large, sold their last assets for fear of losing the entire capital. It was the last and devastating gesture of despair. History shows that this is a classic pattern of euphoria and despair, which took place many times on various assets and will probably happen again and again. In the case of Bitcoin, its construction, by regularly reducing supply, perfectly favors this pattern.
Looking at the Bitcoin chart, you can see two major price movements. A kind of mini-bubble, after which a lot of theories about the reasons for its creation have been developed. At the beginning of April, in one day the price jumped about 25%, nobody knew what the reason was. Later there were rumours that one investor commissioning a bitcoin for 120 million dollars could cause the first increases, and then FOMO did its job. Within three months, the digital gold reached $13,600, which translated into 350% profit. Then, by the end of the year, the price was (and still is) slowly corrected. On the last December 2019, it was $7,300. This means more than 40% correction, and as we know, Bitcoin often corrects by about 40% in a long-term upward trend.
The events of the past year show that the trend of the market and investors’ attitudes have changed. Those “shamans”, who reported on the successive cataclysms a year ago, today happily sing songs about the harvest and the wonderful years to come. As you know, you cannot believe in sorcerers, only your common sense. And what does common sense tell us today about last year?
Technically speaking, the graph shows a classical growth pattern consisting of three waves. This was followed by a typical bitcoin correction, which should actually end slowly, provided that we are in a long-term upward trend, as there are many indications.
So will it be appropriate to wait for increases in the coming months?
I won’t answer that question, because you never know with the cryptocurrencies. Basically, this year was quite a good one for digital currencies, which is hard to find in the chart. After all, those brave ones who decided to shop at the beginning of the year are now enjoying around 100% profit, so it is not bad.
Lightning Network is still growing and more and more partners are joining it. Since December last year, the network capacity has almost doubled.
Of course, there were hacking attacks on the stock exchanges and their downfalls. One of the victims of such an attack was Cryptopia – the New Zealand stock exchange, which lost over 3.5 million dollars in ETH and CENNZ. It would seem that such a sum should not knock down the big player, but the whole matter is shrouded in many secrets, which probably we will not discover. Binance was also hit in a similar way, whose losses amounted to 41 million dollars, and Bitumb, i.e. the stock exchange from South Korea, lost 19 million dollars, with the difference that behind the attack on this company are probably its employees. Also in Poland we had an affair with the collapse of Bitmarket, as a result of which investors lost millions. The death of the President of the stock exchange gave the case a darker character.
Since the bursting of the bubble at the end of 2017, the prices of the cryptocurrencies have been drowning in the ocean’s swamp for almost a year and a half. Many users of the crypto were then expecting some important event, which like a defibrillator will bring the corpse back to life. Such a defibrillator was supposed to be a platform for futures contracts – Bakkt, the start of which was moved many times to a tragedy waiting to rise. When Bakkt was finally implemented, nothing happened to the even greater tragedy awaiting the rise… nothing happened at all. However, this does not mean that Bakkt has no influence on the cryptic market. Futures contracts are an instrument directed mainly to financial players with a huge amount of capital, who are a little bit restrained in the whole industry. This uncertainty is caused by the slow-moving legislative systems in the world and the consequent lack of regulation.
As far as the law is concerned, it is important to mention the law in Germany, which will come into force from the beginning of 2020 and treats the banks as being able to store their clients’ cryptoand provide them with a complete service. From the new year on, every German can collect, transfer and take care of the safety of its cryptocurrencies in its own bank.
On the other hand, more and more governments are going out with national cryptocurrencies projects. Venezuela, which was in crisis, was one of the first to release its Petro, which was not a success. This does not change the fact that other countries are also interested in similar solutions. Thailand and Ghana started talking about creating their own digital currency, and France announced that it would work on a digital version of the euro. The Lithuanian authorities want to issue a collector’s token, which will probably bring them closer to the blockchain world. The most interesting thing is the position of the People’s Bank of China and their idea of a digital yuan, which is ultimately intended to compete with the dollar. This is supposed to reduce the hegemony of the dollar as world money. Given the spectre of future dollar problems and the upcoming crisis, this may be a very interesting rivalry.
Another interesting rivalry is between the big banks. In the middle of the year JP Morgan announced that the bank is working on its own version of the dollar-based stablecoin. Ripple criticizes this news and, as you know, is also strongly connected with the banking sphere.
But the most interesting thing is that all the above mentioned powerful banks and governments were basically challenged by one man. We are talking about Zuckerberg and his Libra project, whose idea is to enable all Facebook users to send money to themselves. The project aroused great controversy and many government representatives expressed mainly negative opinions about it. Facebook’s CEO announced that Libra is to take off this year.
Last year, Donald Trump spoke about Bitcoin for the first time on Twiter and it was a negative statement, which does not surprise anyone. Elon Musk, on the other hand, has started to give his voice to the crypto community. He even became the self-proclaimed CEO of Dogecoin, which caused a pump on the chart of this digital currency. On the second day, he resigned and a dump occurred. It’s amazing how one man’s tweet can affect the financial markets.
Just like athletes have the Olympics and football fans have the World Cup, just like the crypto investors have halving, which is becoming more and more talked about. To those who don’t know, I will quickly summarize that halving is an event in the world of bitcoin, which halves the output of coins, which in practice means a decrease in the supply of currency. There have already been two halvings in history and they have been a powerful driving force behind the bull race. Typically, the downward trend was broken about a year before halving and a year after that, investors counted profits in thousands of percent. Will it be so this time too?
Hopes and expectations are certainly higher than a year ago. We experienced an incredible upswing and slow downswing. However, the last 12 months can be considered as successful. From the technological level blockchain is still developing, companies are constantly finding new applications for technology. Giants such as FedEx, Goldman Sachs, Maersk, Nestle, Apple, Samsung or Toyota are just a few examples of companies working on their own blockchain.
Popularization and adaptation is progressing, albeit slowly, due to people’s distrust in what is new. However, legislative progress in many countries such as Germany and Estonia will certainly affect other economies that will not want to fall behind. The increasingly widespread use of cryptocurrencies is causing new people to join the market all the time. Moreover, the digitalization of life in today’s societies has revealed a new problem, which is the lack of easy and fast money. Bitcoin itself, with the prospect of halving in May and the upcoming financial crisis, can really do well. He has proven many times that when something bad happens somewhere in the world, its value increases.
So for the coming 2020, I wish everyone a happy New Year, a lot of health, the right investments and dreams come true. To make this year a year full of growth for us. In the last sentence, I would like to add that in my opinion, over time the industry will mature and stabilize, and Bitcoin will no longer be a “unstable teenager”, but a serious and important currency in the world. I also feel that the coming year may be the last opportunity to shop before the rapid expansion of crypto and blockchain.