2019 saw many exciting developments in the world of cryptocurrency. One of the events that captured the world’s attention was a rally for Bitcoin as investors prayed for a return to the bull market of 2017. From comments made by influential businessmen like Elon Musk and investors like Warren Buffet to the delisting of numerous altcoins by cryptocurrency exchanges, here is a look at the 2019 crypto year in review.
The Rise, Fall, and Resurrection of Facebook Libra
There were rumblings as far back as 2018 that Facebook was quietly developing its own cryptocurrency. When the announcement came it helped to clarify Facebook’s stance against advertising for ICOs. The social media giant apparently did not want to deal with any competition when it comes to crypto.
Libra was regarded with skepticism by some crypto insiders from the start. It was announced that Libra would be a stablecoin, perhaps pegged to the US dollar. Some stated that it would be used to pay for services through Messenger or other FB platforms. As much misinformation was offered as truth, and much of that was due to Facebook remaining quiet until their hand was forced by the US government.
In Congress lawmakers called for greater scrutiny of Facebook Libra. Some lawmakers even wanted public hearings on the matter. In the end not much happened one way or another, but Facebook still seems to have slowed the progress of Libra. In the eyes of many analysts this is a good thing. Some think the project was doomed to fail in its current form. Others believe it can be very successful if Facebook makes some changes. 2020 should be interesting for those watching Libra developments.
The Waiting Game for Cryptocurrency Regulation
All across the world governments continued their efforts to find a place for cryptocurrency in the world’s economies. Some regions moved much closer to the regulation of cryptocurrency trading while others held their present course. When the smoke cleared there wasn’t much to write home about in 2019.
Of course, eyes are most often cast on the United States and its approach to cryptocurrency. The US will likely tackle crypto matters in 2020, but an unstable political climate involving the impeachment of the US president took many matters off the table in the second half of 2019. Some analysts think this makes it more important for us to clarify the existing laws that have been made regarding crypto rather than trying to develop more regulation.
The problem for 2020 is that it is a major election year in the US. This means that very little legislation will be considered, and cryptocurrency regulation is not really considered a priority anyway when compared to other matters. It is a safe bet that 2020 will come and go without a significant alteration of the cryptocurrency landscape.
China and Central Bank Digital Currency
China has made no pretense about its stance on cryptocurrency. It hates the concept of virtual currency…until it doesn’t. That was the big message regarding crypto to emerge from China in 2019. It was confirmed that the Chinese government was developing its own cryptocurrency project that would result in a digital token that is backed with gold.
You may recall that China took measures to prohibit cryptocurrency exchanges in the country. Not too long after this there was news that China would support some blockchain development within its own borders. Then came the news of the token project, and all of a sudden it looked like China was bullish on crypto.
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The reality is a little more complicated than that. China has likely realized that it cannot compete with other governments who are more open to Bitcoin and other cryptocurrency in some regards. As more financial institutions accept blockchain technology there is more risk of China losing the world’s economic race. This is also complicated by the current trade war that has been waged between China and the US.
Musk Challenges Buffet on Bitcoin
Warren Buffet continued his bearish stance on Bitcoin by making negative comments in his annual letter to Berkshire Hathaway stockholder. At least Buffet is a measured in his criticisms of cryptocurrency. His partner, Charlie Munger, likes to refer to Bitcoin as fecal matter.
This year when Buffet chose to speak out on Bitcoin his comments did not go unchallenged. Elon Musk, the enigmatic and controversial technology giant, clapped back and suggested that Buffet was too set in his ways. Whether or not Musk meant his words to be prophetic they turned out to be somewhat accurate. Buffet had one his most difficult years as the head of Berkshire Hathaway, despite the stock market successes of 2019.
One has to wonder how long Buffet can resist the allure of Bitcoin. Some think he feels slighted that he has not been asked to play in the same sandbox as the bigwigs of Bitcoin, and everyone knows how Buffet responds to a slight. His whole investiture with Berkshire Hathaway occurred as the result of a perceived slight.
That Wait for the Bitcoin Bull to Charge
As the latter half of 2019 there was much excitement on the part of Bitcoin investors. Could it finally be happening? Was Bitcoin going to make the rebound that everyone had predicted? It sure seemed that way as Bitcoin passed $10,000 for the first time in many months and marched toward $15,000. It was an exciting time for the cryptocurrency markets.
It turned out that the celebration was premature. Bitcoin faltered as it breached critical resistance levels and tumbled back to the neighborhood of $8,000. This is where it remained and where it began 2020. Most analysts now seem to think that it will remain there in a holding pattern throughout the first few months of 2020.
But, there are differing opinions. There are still some analysts who are predicting a $100,000 Bitcoin in 2020. Some others think that a whale could emerge to cash in vast amounts of Bitcoin and crash the entire market.
The XRP Glitch
For just a few hours in October of 2019 the XRP, or Ripple, token, briefly traded at more than $8,300 on Coinbase. Yes, you read that correctly. For about a minute the coin spiked in value thanks to an insane sell order. A buyer took the bait and wound up paying more than $8,300 for a cryptocurrency token that regularly trades at less than $1.
The experience just goes to show how volatile cryptocurrency can be. Rather than sit around trying to anticipate when such a glitch may occur, it would be better for investors to use this example as a tool for reflection on the risk of trading.
Altcoins Vanish From Crypto Exchanges
Everyone knew it was going to happen at some point. Cryptocurrency exchanges were bound to pull the plug on all those tokens created by all those ICOs. We’re talking about tokens like XPAT, the digital currency of Bitnation. So many others that were the product of scam ICOs also got their just reward. Bitstamp and Binance led the way by purging their exchanges of multiple digital tokens.
This should be a positive development in tandem with tighter restrictions on ICOs. Most jurisdictions have taken the approach of classifying ICOs in the same regard as IPOs. In other words, the Securities and Exchange Commission in the US got more involved in 2019.
The year was a good one for the altcoins with enough staying power. Tokens like Ether and Litecoin continue to prove why they are good alternatives to Bitcoin. The takeway from all of this is that tokens which are founded on solid footing have a chance to survive. There has to be some appeal beyond that of a virtual currency. The altcoins that succeed are ones that have proven themselves useful in terms of the blockchain applications that they support.
With that being said there were some legitimate altcoins that took a beating in 2019. Chief among these was Stellar. It dropped below $0.10 in value and pretty much stayed there despite all the promise it shows.
Summing up 2019 in Cryptocurrency
A realistic evaluation of the year in crypto for 2019 would have to be on the positive side of the pendulum. We saw more governments become open to blockchain technology, Bitcoin go on a rally, and Facebook’s announcement that it would become a crypto developer. Any of those things had the potential to cause major moves in the cryptocurrency market, but the response was tepid overall.
Is this a sign that cryptocurrency is coming into its own as an asset class? Does it mean that investors have begun to approach Bitcoin with the sentiment that it deserves. 2019 was a wake up call to all the crypto investors who scored big in 2017. The year sent a clear message that the days of crazy gains could be over.
But the news wasn’t all bad. There was hope in the form of a limited Bitcoin rally that shows the token still has the power to move investors. Most would agree after 2019 that a value of $20,000 is not so extreme after all. Those crazy predictions putting a single Bitcoin at $100K might be far fetched, but $25,000 doesn’t seem so improbable today.
All those regulations that people have been worried about? Maybe they should relax a little bit. Governments around the world have been consumed with other matters. In the US it was impeachment. In the UK it was Brexit. Make no mistake, those regulatory fish will be fried in time. But right now the frying pan is simply too full.
If you are an active cryptocurrency investor you probably ended the year on a high note. We hope that your positive sentiment continues in 2020.