As we say goodbye to 2019, let’s review the year for Crypto & especially Bitcoin. Many others have written their thoughts, but these two in particular deserve a mention:
Jameson Lopp’s Annual Review & Bitcoin Optech Newsletter #78: 2019 Year-In-Review Special
The Optech in particular is great as it shows you the coding improvements that took place with each release. This is probably the most important part of crypto’s future, the continued effort by core developers to improve Bitcoin. Unlike prior years, this one did not have much controversy (thank you “Big Blockers” for forking off into your various Shitcoin projects).
Here are my top 5 positive trends from the year that was.
1. Stability of the Bitcoin Blockchain – While there was an over exaggerated inflation bug that theoretically could have been exploited, there were no critical issues with the protocol and Bitcoin had 100% up time throughout the year. This is more important than people realize because it’s the confidence that your transactions WILL go through that separates Bitcoin from everything else in crypto. The “move fast & break things” model may work for companies but it is NOT what you want in your base layer of FinTech and your life savings. It may be fine for Ethereum with "ok can you guys stop trading" - Vitalik Buterin, but not for Bitcoin. Or if CZ of Binance was able to have miners reverse or block their hacked coins, I would not even be writing this as I would be off doing something completely different with my life.
2. Cost & Speed of Transaction – Segwit transaction have finally crossed the 50% mark and are never looking back. While there are still bad actors like Blockchain.info who claimed they were ready for Segwit in January 2017, their efforts to keep transactions slow and expensive have continuously failed. Contrary to propaganda by the BCash crew at Bitcoin.com, transactions have been so cheap and so fast, that there still has not been much of a need for the Lightning Network. This is actually a good thing as it allows the development of Lightning to go on without much scrutiny and time pressure to release upgrades as the second layer gets ready for Hyperbitcoinization in a few years.
3. Launch of Liquid Sidechain – Yes, Ethereum was the first to provide a standardized platform & structure to launch scammy ICO tokens. This brought lots of hype and certainly contributed to the massive 2017 bubble in all crypto assets that saw ETH reach $1,600. Today Ethereum has lots of competition from EOS, Tron, Tezos, Cardano, Neo, Waves & more, but all of them are just as centralized and unscalable as Ethereum. It’s really amazing how people continue to fall for protocols that have all the same faults as traditional databases with all the disadvantages and scalability issues of Blockchains. If one of these layers is going to take off one day, it’s going to be Bitcoin’s Liquid sidechain. Tokens like Tether have already made the switch and all future ICOs & STOs will most likely be using it as a base layer going forward.
4. The Incredible Growth in Bitcoin’s Hashrate – This one is actually surprising. As 2020 begins, BTC price is still down 65% from the all time high two years ago but the Hashrate is up 200% for 2019 and 750% over those two years. Even considering the fact that Hashrate lags price by about 6 months as it take time to order, receive and set up equipment, this is an incredible development. It's really amazing how people believe in other proof of work coins, how are they able to compete with this? For example, Monero is up about 80% in Hashrate over the last two years (which make sense as people still feel Bitcoin does not have sufficient privacy), Litecoin’s Hashrate is up only 45%, BCash is similar with 37%, and Ethereum’s Hashrate is down 7.5%. If these trends continue, how will there be confidence from the general public that your coin is not at risk of 51% mining attack. Bitcoin also has an advantage in that it’s easy to anonymously profit from attacking a shitcoin then moving profits to Bitcoin.
5. Rise in Bitcoin Dominance – All the prior points above have made smart people put their money where it belongs. While Bitcoin dominance rose a lot in 2018 from a low of 35% to 55%, due to Shitcoins falling faster and harder than Bitcoin in price. The rise in 2019 from 55% to 70% was way more impressive. That is because Bitcoin rose in price faster than Shitcoins. This is incredibly encouraging for the future. The fact that Bitcoin has outperformed 9 out of 10 of the next most popular altcoins is a really big deal. And what can we say about the lone BNB token that outperformed BTC, just give it another year, nothing changes, there have been over 3,000 crypto tokens that have failed to outperform Bitcoin on a long(ish) time scale, the 3000 and first will be nothing different, even if it is funding a popular exchange.
Wow, that ended up being longer than expected, like most of my videos. But now let’s have a look ahead into 2020, and what Top 5 trends to expect in the year ahead:
1. Privacy is Coming – 2020 will be the year we finally get a soft fork with lots of Privacy features. In addition, more and more wallets will start to offer coin joins and other ways to make your transactions more anonymous . We will finally end the insanity that Monero is useful like how it’s now obvious that BCash and Litecoin are not needed to scale Bitcoin transactions.
2. The Death Blow to Alts – Between Liquid and Lightning, this is the year that Bitcoin dominance should break 85% and perhaps even 90%. It has nothing to do with Bitcoin Maximalists wanting this, it has to do with the free market making it happen as all the real innovation is taking place on the Bitcoin Blockchain. This is expected regardless of price. Bitcoin will rise (on average) faster than the alts while falling (on average) slower than the alts throughout the year.
3. Bitcoin Hashrate Should Struggle – We all know that the halving is coming. Is it priced in? Maybe, maybe not. If you are an inefficient miner now, it’s obvious you will close shop. If you look at the prior two halvings, the Hashrate took off like a rocket following the halvings. This was mostly because the price rose (yes, I do believe that Hashrate follows price). But not this time. The reward drop from 12.5 bitcoin to 6.25 is going to be a lot more significant to the bottom line than the prior halvings. Without the big 2017 ICO bubble on the horizon, the price is not likely to hit $50k in 2020, which is what is needed to simulate past Hashrate growth during the halving year. In addition the advancement in mining hardware has not made any giant leaps forward like in the past.
4. SEC Will Really Make Waves – Yes the big hammer on ICOs is still coming and 2020 should be the year, but here is some positive news. I believe that by the end of 2020 we will hear positive statements from the SEC about a future approval for a Bitcoin ETF. It is about to be 4 years since the original rejection statement in March 2017. Now we have a lot more traditional institutions like ICE and Fidelity involved in Bitcoin so their connections should start to make the regulators more comfortable with the idea. The launch of a Bitcoin ETF will certainly be bullish for the price, whether it’s good for Bitcoin’s decentralization and stability however, is probably a discussion for another time.
5. No New All Time High in Price – At the time of writing, this might be a dangerous statement. US vs Iran relations have escalated for the worse, the stock market is dropping hard in overnight trading, gold is at a 6 year high threatening new all time highs in 2020 and Bitcoin just rose from under $7k to $8.5k in less than a week and looking strong. All it will take is a mere doubling in price to prove me wrong, something Bitcoin has done too many times to count in a bull market, but this is not your standard bull market. While the low from the $20k top is very likely in at $3k (Dec 2018 & Jan 2019), the exponential rise of the first half of 2019 has still not fully resolved itself. We continue to make lower highs and lower lows since that June 2019 top and until this cycle is broken, the trend should remain your friend. For me to be a Bull, I would need a sustained close above $10k in the current rally that started around $6.5k. Until that occurs, the odds favor new lows sub $6k. If the price does fall below $6.5k, then I will become a Bull with the break of the current swing high which at the time of writing is $8.5k. it’s all about breaking the cycle of lower highs and lower lows that are taking place approximately every 1-2 months since June.
So when am I expecting this final low from the current “mini-bear” from the $14k swing high in June and at what price target? Short answer, before the halving and in the vicinity of $5k. But here is the longer and more detailed explanation. Now that many are expecting a bottom near $5k, it is less likely to occur, will it not fall that low or overshoot, no one knows so we have to wait and see. This swing low occurring after the halving will be very unexpected by the community and downright scary. Perhaps this is what is needed to turn the tide and have Bitcoin go to new all time highs while the majority is scared. That is what happened in early 2017 as Bitcoin went up despite the fact that most were scared of the forks and thought Bitcoin is going to die. Because I am still expecting a lower low in the $5,000 vicinity (before the halving but not ruling out after) it will take time to climb back above $10k. This is why I am also expecting BTC price to spend the majority of the year below $10k and close out the year in the vicinity of $10k. After 2 years of being a Bear 80%+ of the time since January 2018, 2020 should be the year I turn Bullish and stay that way 80%+ of the time into the next pump which I’m not expecting until the vicinity of next halving.
Disclaimer: This view on price is not trading advice & is only good until my latest video. With every minute and price tick, the picture changes and so will my outlook & probabilities of expectations in future outcomes. Good luck traders, but for those that have been in the game for a while, you know it’s not about luck, it’s about Risk & Money Management.
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