2018 has been almost a whole year long bear market. However, I still believe that the future of cryptocurrencies is bright and that 2019 is going to be very different from 2018 for many reasons. In this article, I will describe every one of them step by step.
5 main reasons to affect cryptocurrency prices in 2019
NASDAQ will list cryptocurrencies sometime during 2019. Some experts believe that this will happen during the first half of next year. This would be the proof of crypto establishment as a fully functional instrument.
Large institutions, like Fidelity, Blackrock and Goldman Sachs have already started to get involved in the crypto and blockchain technology. For example, Goldman Sachs is working on a bitcoin trading desk which should be launched very soon. Fidelity is actively developing crypto custody and other related services. Blackrock, the largest investment management firm in the world, recently announced the plans to invest in the bitcoin futures market. Consequently, I believe that more institutions will enter this industry and offer a variety of crypto-based derivative products.
Regulatory approval for crypto Exchange Traded Funds is imminent and is expected to happen during 2019, sooner than later. Many applications have already been submitted and there are huge efforts from consortium legal teams who work with the regulators in order to get them approved. Such ETFs will allow investors to diversify their portfolio and gain exposure to another asset class which is not directly correlated with the traditional equity market.
Chicago Mercantile Exchange and Chicago Board Options Exchange already offer futures trading — this has allowed institutional investors to test the waters. Although they could not hold actual crypto assets, they could speculate about its price fluctuation. The next step is, that once they can legally hold crypto assets, they would feel much more comfortable with what to expect.
Crypto custodial services which meet the strict requirements by regulators and institutional investors are getting live already. Coinbase, one of the leading cryptocurrency exchanges in the world, has already launched regulated custodial services after partnering with Electronic Transaction Clearing (ETC).
Why regulations will influence the market in a positive way and who will benefit
Although it seems as if regulators are being way too strict with ICOs, the truth is that they are way less demanding from an ICO compared to an IPO, whether that is from the filing process or the incurred costs. On the positive sides, all regulations will definitely help. Institutional money will not enter an unregulated market, therefore, regulations are surely benefiting the market for the long run. The price spike which we have seen last year was mainly caused by two main groups: the dirty money which needed to be kept in a safe anonymous place, and the retail investors who wanted to catch a rising tide. In my opinion, as regulations started to crack on the money laundering, such assets started to liquidate which cause a sharp decrease. Consequently, the retail investors could not absorb over 50% meltdown of their assets, so it caused them to sell at a loss, and that brought the market down even more.
So why am I still so optimistic? When we see that the price of crypto is selling at a lower rate than the cost of its production (mining), it means that it is just a panic sale by the weak hearts, and those are the last few retail investors leaving the market.
Having very highly discounted prices, combined with regulatory clarity and infrastructure by institutional investors to trade and store their assets, 2019 is going to be a big year for institutional and smart money. The price appreciation may attract back the retail investors who might still have deep wounds from 2018, but their participation compared to institutional money is very negligible.
The imminent participation of institutional investors will surely result in a bull run. The trade will take place under regulated circumstances, where there are the real buyers and real sellers at each side — not like 2017 where robots were selling to each other without exchanging a single transaction on the blockchain, just for artificial price inflation, and trade volume manipulations by the TOP exchanges. The market manipulation will be almost absent, and the bears will have all the tools to shorten cryptos which have registered huge unjustified gains within a very short period of time. Therefore, it will be an even level playing ground where all market participants have equal rights to participate and influence the price fluctuations.
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