After a year-long bear market, many of the cryptocurrency predictions in the mainstream media foresee the decline ending with a thud: irrelevance at best, death at worst.
But pronouncements of the end of crypto are premature. Much will happen in 2019 to prove that it's a mistake to give too much weight to the bursting of 2017's speculative bubble.
These developments will show cryptocurrencies are here to stay, both as a technology and as an asset class.
This space will also show signs of maturing as it grows out of its "Wild West" phase.
Here are my cryptocurrency predictions for 2019...
Wider Acceptance as an Asset Class
One thing we'll see very early in the year is the arrival of two of the world's biggest stock exchange companies - the Nasdaq (in a partnership with VanEck) and Bakkt, a unit of Intercontinental Exchange Inc. (NYSE: ICE), which owns the New York Stock Exchange - in the Bitcoin futures markets.
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This strikes me as a big deal for several reasons. The first is that if these powerful entities believed cryptocurrencies were on their way out, they would have scrapped this idea. Both Nasdaq and ICE obviously believe that money can be made by offering crypto futures.
Clearly, these major financial institutions believe cryptocurrencies will be around for the long haul.
It also means that by early 2019, Bitcoin futures will be trading in four distinct markets (the CME and CBOE being the other two).
The Bakkt futures market is especially momentous in that those contracts will be the first to be settled with the underlying Bitcoin, not U.S. dollars. The ability to manipulate markets will be limited because traders will need to pony up actual Bitcoin (as opposed to betting on price moves with U.S. dollars). And market manipulation has been the chief reason the U.S. Securities and Exchange Commission (SEC) has so far denied all incarnations of a Bitcoin ETF.
Speaking of which, the SEC has been right to be cautious on approving an exchange-traded fund based on Bitcoin. But the pressure will build in 2019, starting with the expansion of the Bitcoin futures markets.
The increased involvement of Wall Street in Bitcoin-related investing and the reality that all markets suffer some degree of manipulation means the time has come for the SEC to approve the first Bitcoin ETF. And with one member - Hester Pierce - on the record as favoring approval, I like the odds of this finally happening this year.
Another development that will help draw more big investors into cryptocurrencies will be the rise of top-name custodians - trusted financial institutions with the ability to hold and store crypto securely for others.
This is similar to the way investments in physical gold are handled. And while some crypto companies such as Coinbase and the Winklevoss twins' Gemini Trust Co. do offer custodial services, many institutional investors are waiting in the sidelines until the veteran custodians, such as State Street Corp. (NYSE: STT), jump into the arena. And the odds are high that will happen this year.
But that's not all...
Blockchain Is More Than a Buzzword
No doubt you've heard talk about the blockchain, the technology underlying Bitcoin and many other cryptocurrencies. It matters because it's the foundation on which crypto is built. And because it's software, it has almost limitless potential to evolve.
To me, one of the most encouraging things about 2018 was that work on blockchain development never wavered, even as crypto prices were slipping. In fact, many key developers have found a silver lining in the crypto bear market.
"If anything, the calming of the hype and frenzy helps us because there are fewer distractions and it's a better time to keep on building," Lightning Labs CEO Elizabeth Stark recently told CoinDesk.
While the media rarely talk about this aspect of crypto, its future ultimately depends on the progress of the top projects, such as Ethereum, XRP, Cardano, IOTA, and Bitcoin's Lightning Network. And all will continue to move forward in 2019.
Meanwhile, we're also stuck with hundreds of useless altcoins - cryptocurrencies created with no clear purpose (or simply to enrich their creators). While we may not be rid of all of these in 2019, the extinction of these superfluous altcoins is likely to accelerate this year.
And that leaves us with where cryptocurrency prices will go in 2019...
My 2019 Cryptocurrency Price Predictions
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I don't want to disappoint you, but I don't have a specific target price for Bitcoin or any other crypto for the end of 2019.
Frankly, a lot of crypto pundits embarrassed themselves in 2018 with sky-high predictions made in the aftermath of 2017's record highs. Many of these pundits have been called out, particularly on Twitter - and the critics have not been kind.
However, I would like to point out that those who continue to write obituaries for Bitcoin and other cryptos are just as mistaken as those who made lofty price predictions.
Consider this: According to CoinMarketCap, Bitcoin ended the year at $3,745, a 73% drop for the 2018 calendar year and an 81% drop from its all-time high. And yet the Bitcoin price is up 290% from where it was on Jan. 1, 2017.
The idea here is that focusing on the volatility in cryptocurrency prices will only give you ulcers. The larger point is that over time, the value of the top cryptocurrencies will become more apparent to more people. More capital from big investors will enter the system. And as it always does, rising demand will fuel rising prices.
And Bitcoin, the bellwether of crypto, will lead the way. I see its dominance in the crypto space continuing through 2019 and beyond.
I will go this far: I believe Bitcoin will get back to the all-time high of just under $20,000, though not necessarily in 2019. You might have to wait until sometime in 2020 - but it will get there.
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About the Author
David Zeiler, Associate Editor for Money Morning at Money Map Press, has been a journalist for more than 35 years, including 18 spent at The Baltimore Sun. He has worked as a writer, editor, and page designer at different times in his career. He's interviewed a number of well-known personalities - ranging from punk rock icon Joey Ramone to Apple Inc. co-founder Steve Wozniak.
Over the course of his journalistic career, Dave has covered many diverse subjects. Since arriving at Money Morning in 2011, he has focused primarily on technology. He's an expert on both Apple and cryptocurrencies. He started writing about Apple for The Sun in the mid-1990s, and had an Apple blog on The Sun's web site from 2007-2009. Dave's been writing about Bitcoin since 2011 - long before most people had even heard of it. He even mined it for a short time.
Dave has a BA in English and Mass Communications from Loyola University Maryland.