Crypto trading strategies for 2019
It’s hard to believe it was just a year ago that bitcoin was peaking at almost $20k, and the ICO craze was in full swing. A cooling of the market and a spate of failed vaporware ICOs have caused a drop, with bitcoin value bottoming out recently at just $3,200.
Industry-wide, executives are more subdued but cautiously optimistic. There are plenty of reasons to be optimistic, from regulatory acceptance to the ‘clearing out’ of many sub-standard cryptocurrency attempts.
While there’s no way to predict exactly what will happen, all signs are pointing to a bullish 2019. We’re going to look at some of the factors that we believe will contribute to that, and highlight what we believe will be some winning cryptocurrency strategies.
In putting together this cryptocurrency trading guide for 2019, we pulled together many expert opinions along with raw research into key indicators. As always, you should do your own due-diligence before making any investment, and only invest what you can afford to lose.
Bitcoin set to rebound?
The very first cryptocurrency, bitcoin, had a pretty dismal 2018 losing as much as 79% of its value over the course of the year. While a general market cooling, and maybe a bit of a hangover after the highs at the end of 2017, contributed to the losses there were other factors.
In November, a hard fork loomed with two competing factions creating a split in bitcoin offshoot bitcoin cash. Many also took their bitcoin earnings and invested in new ICOs only to have the upstarts go belly-up.
In their “Year-Ahead Predictions 2019” report, the Global Business Policy Council of financial firm ATKearney put their weight behind bitcoin.
“By the end of 2019, Bitcoin will reclaim nearly two-thirds of the crypto market capitalization as altcoins lose their luster because of growing risk aversion among cryptocurrency investors,” stated the report.
The simplicity of bitcoin is its biggest strength, and while many altcoins struggle to solve a specific problem, bitcoin is still the cryptocurrency that is the most widely circulated and accepted. We think a bitcoin investment is a good strategy for 2019.
Factors to look out for
Financial markets are driven by external factors, and there are quite a few that are set to affect the cryptocurrency market. It’s important to choose trading strategies that take these factors into account.
Regulation is a huge factor, and as governments around the world grapple with how and how much to restrict and monitor the trading of cryptocurrency. From self-regulation in Japan to ETF status in the US, there are concerted efforts to create stability, encouraging mainstream adoption and attracting institutional investors.
Trading volume is still high, and the increased number of decentralized exchanges have encouraged some of that volume. A recent report predicts a 50% increase in crypto trading volume for 2019 with an aggregate gain of 9% through 2028. That means a long steady rise and now is the time to enter the market.
In fact, if you’ve been sitting on the sidelines but curious, 2019 is the year to get involved. Bitcoin’s recent lows, which have driven down the market as a whole, mark an attractive entry point. Many predict bitcoin will reach and exceed historic highs, so buying and holding now is a solid strategy.
Each year has brought about an exponential increase in ICOs, from a handful just three years ago to over 1,200 this year. Expect that number to fall for the first time, and the upshot is that the ones that do make it to ICO stage will have a solid product to offer.
Gone are the days of prospecting, vaporware and Ponzi schemes. Crypto investors are much savvier, and we’ve recently seen a drop in successful ICOs as skepticism increases. The skepticism is needed to hold executives to account, and the net result will be higher quality startups and actual products.
Companies are actually developing a product first, as opposed to just publishing a white paper and making their ICO live.
“That’s something I see changing in the industry,” said Aviv Lichtigstein, who founded 101 Blockchains. “We’re going to see more companies building technology before publishing a whitepaper. There need to be more working products and fewer papers.”
Out of around 2,000 cryptocurrencies that have been released, almost 1,000 are dead according to deadcoins.com, a website that tracks dead, failed and scam coins. You’ll see even more fail or be consolidated, and that is a good thing for the ones that stick around.
Institutional investors are coming
With regulations being formalized, taking some volatility from the market, it’s only a matter of time before institutional investors arrive en masse to the cryptocurrency market. The SEC recently approved an institutionally connected crypto trading firm, Bakkt.
One of the founders of top bitcoin exchange, Coinbase, has joined the team at Bakkt and is looking to help bring ETF’s, securities, futures and other institutional trading elements to the crypto market. They aim to make investing in bitcoin attractive for things like 401k’s and their parent company also owns the New York Stock Exchange.
While many crypto purists will balk at the news, it means investment, acceptance and growth. For cryptocurrency to succeed long term, it has to appeal to a wider audience and these mainstream investments will drive that growth.
Bear to bull
While pretty much all of 2018 was a bear for the cryptocurrency market, those that survived are set for a bullish 2019. We see not only the return of bitcoin as leader but also the growth and founding of many more well-prepared firms than we’ve seen in recent years. The Wild West days of cryptocurrency are over, and that is a good thing.