What is the future of cryptocurrencies in 2020? This is a tough question with a variety of answers. This year, the attention of investors in digital money will be focused on national cryptocurrencies, the development of the cryptocurrency derivatives market and mining. In this article, we will talk about all the crypto trends of 2020.
Is Bitcoin Money of the Future?
This year’s important trends will affect the cryptocurrency market in 2020. For example, the rapid development of the crypto derivatives market, primarily based on Bitcoin.
On the one hand, the emergence of regulated trading floors in the USA is perceived by the community as positive because they attract institutional investors. On the other hand, derivatives do not completely contribute to a bull market. There were periods when trading in Bitcoin futures was active, even with a significant decrease in the underlying asset, although the supply contracts for Bakkt are less speculative.
You can also recall the recent statement by Christopher Giancarlo, who was the head of the US Futures Market Commission. He is confident that US officials deliberately launched regulated trading of Bitcoin futures on CME and CBOE at the end of 2017 so that the bubble on the cryptocurrency market burst under the pressure of short positions.
Another expected event is the Bitcoin halving, which will occur in May 2020. Many evaluate it as a factor in price growth.
You can read more about Bitcoin (BTC) price prediction and halving in our article.
Future Cryptocurrency to Invest
Throughout 2020, we will see a possible continuation of the altcoin crisis. There are thousands of coins on the market now. However, the vast majority do not have liquidity, have no value, and are not in demand. Most likely they will disappear gradually.
The Ripple company claims that XRP coins are used by two dozen corporate clients to conduct cross-border transactions. If XRP has developed as a utility token for converting one currency to another during a transaction, then its price does not really matter. So, it is not an investment asset. The demand is not yet so high. Ripple is selling more and more coins to customers.
Ethereum is undergoing major changes on which the future of the main blockchain platform for decentralized applications will depend. The update is so large that it is unofficially called Ethereum 2.0. It should significantly increase the scalability of the network. The plan is to switch to the Proof-of-Stake mechanism and introduce sharding. The update will last the whole year and will affect the fluctuations in the price of Ether.
Another important factor is how Ethereum 2.0 impacts the decentralized application market. Hopefully, that will be positive. Last year showed that the blockchain is well suited not only for betting and trading but also for video games.
As for Tether, Binance Coin and other native exchange tokens, their price is determined solely by the activity of traders. Exchange tokens are one of the most sought after coins. The recession of hype after 2017 did not affect the spot market. It continues to expand. Exchanges have become more regulated, secure, overgrown with various services. A system of transparency in their work is slowly being created.
Is There Any Future of Cryptocurrency
Cryptocurrencies are developing not only in perspective of price. For instance, national currencies and derivatives open new prospects for the crypto market.
Central Bank Digital Currency (CBDC)
The most anticipated currency today is the digital yuan. This will be a significant step in changing the financial system. The Chinese authorities are actively introducing many modern technologies into the everyday life of their citizens, so it can be expected that at least within the country, crypto-yuan will quickly spread in accordance with the party’s plans.
For other countries, 2020 should be the year of the release of their own digital currencies. Most likely, they will appear after crypto yuan.
The appearance of CBDC on the state agenda was mainly due to the recognition of the potential of cryptocurrencies, especially stablecoins. Organizations such as the International Monetary Fund and the Bank for International Settlements (BIS) have repeatedly said that central banks should start developing their own cryptocurrencies.
In the future, we can expect a single global digital currency. In October 2019, the Bank for International Settlements held the first G20 Central Banks summit to discuss the idea of a global cryptocurrency. In Switzerland, the Bank for International Settlements, together with the Central Bank of the country, has already created a center for the development of a single settlement token among the world Central Banks.
All of the above facts tell us that the transition of states to digital currencies is one of the elements of the next stage in the development of mankind. Its appearance is a matter of time.
Future of Mining
The mining market is becoming more mature. We do not expect excess profits from cryptocurrency mining if its price does not begin to grow rapidly, as it was in 2017. At the same time, mining continues to attract institutional investors.
Today the market is saturated with equipment. Manufacturers have learned how to increase sales flexibly and quickly. These are a driver of network growth and keeps a fairly stable moderate level of mining profitability.
Institutional investors will play an increasing role in the development of the industry. The factor determining the success of an investment is the cost of electricity. Capacities using energy below $0.03 kWh are not only more profitable but continue to operate in almost any situation on the market.
In 2020, we expect a gradual decrease in the share of Chinese mining. The main growing regions in the near future will be the USA and Canada. North America, as a region with developed law and well-established investment protection mechanisms, is of interest primarily to the most cautious investors.