Cryptocurrency market have always been high risk high return but yet delicious for investors. Hence check out these 10 things telling you 2020 is the year of cryptocurrency! Don’t wait until it’s too late!
1. The Global Macro Investors Come In
Ray Dalio clearly laid out the global macro thesis for crypto when he said:
“So, the big question worth pondering at this time is which investments will perform well in a reflationary environment accompanied by large liabilities coming due and with significant internal conflict between capitalists and socialists, as well as external conflicts. It is also a good time to ask what will be the next-best currency or storehold of wealth to have when most reserve currency central bankers want to devalue their currencies in a fiat currency system.”
Ray’s conclusion was to buy gold. In 2020, believe that large global macro hedge fund investors (potentially even Ray) will publicly take the position that bitcoin is a logical asset to hold if you believe this narrative.
2. Traditional Asset Managers Continue to Trickle In
State Street survey indicating 94% of their clients hold digital assets or related products, and a survey of endowment funds in which 94% of them stated that they invested in crypto assets over the last year.
These types of traditional asset managers continue to show strong interest in crypto in 2020
3. Bitcoin Derivatives Trading Grows, Altcoin Trading Shrinks
For active retail traders looking for quick gains, long-tail Altcoin trading was once the place to find the volatility and potential they sought.
Now, with Altcoins down 90%+ from highs, active traders are increasingly moving to leveraged bitcoin derivatives trading, which offers the volatility they seek, in an asset that is not on its way to zero.
4. Stats Get Stacked (and Earn Interest)
While derivatives are great for active traders, the more important developments for those accumulating crypto are those that enable them to easily grow their holdings.
In 2020, this will happen in two ways
1) The ability to earn crypto for retail activity will accelerate as more e-commerce and payment companies integrate this into their offerings
2) Crypto holdings will increasingly migrate to places where they earn interest
5. Automated Tax-Loss Harvesting Becomes Available
Crypto taxes are a disaster not only due to the horrendous reporting from many exchanges but also because investors are missing out on the ability to significantly reduce their taxes via automated tax-loss harvesting.
Personal Capital and robo-advisors made tax-loss harvesting mainstream for traditional assets, and in 2020, this will finally come to crypto (along with better tax reporting).
6.Fewer Exchanges, More Brokerages
The number of crypto exchanges exploded over the last few years. In 2020, Exchanges are inherently network effect businesses (liquidity begets liquidity), and smaller players will fall behind, and either be acquired, fold, or pivot their business models.
Those that excel at acquiring and servicing customers will become brokerages and source their liquidity from other exchanges or large liquidity providers.
7.Crypto Friendly Banks Scale
Obtaining fiat banking accounts and payment services has been, and will continue to be, one of the biggest issues for crypto companies. Around the world, large risk adverse banks will continue to shy away from banking the crypto industry, providing an opening for new entrants and smaller players to fill the gap as technology-driven intermediaries, or full-stack de novo banks. In 2020, We expect some new entrants to run into significant issues with regulators, while those that are able to navigate regulatory pressures will scale impressively.
8. Lending Market Grows
The crypto lending/borrowing market flourished in 2019, In 2020 volumes will continue to significantly expand across several vectors
1) Traders borrowing crypto to short and overcome capital inefficiencies
2) Investors borrowing dollars using their crypto as collateral (much more tax efficient then selling)
3) Crypto companies becoming de facto banks by taking stablecoin deposits and making stablecoin loans.
9.USD Stablecoin Market Cap and Volumes Accelerate
Tether’s remarkable resilience has demonstrated insatiable demand by market participants not directly served by U.S. banks to have USD denominated accounts to settle trades and store value. Tether’s market cap to continue to continue to grow in 2020.
The regulated fiat-backed USD stablecoin market (USDC, TUSD, PAX) will experience huge growth rates (off a relatively small base) as they become the money transfer rail.
This will be a compelling position that sits between the Silvergate Exchange Network (regulated + closed network) and Tether (unregulated + open network).
10. Central Bank Digital Currencies (CBDCs) Remain Mostly Conceptual
Most contemplated CBDCs are significantly different than stablecoins such as USDC. With CBDCs, the record keeping of the value owned by individuals and businesses is centralized with a central bank. There are only a few situations where a central bank/government is likely to take over this record keeping function (e.g., China).