The crypto industry has been through a veritable rollercoaster over the past two years. After hitting historic highs of nearly $20,000 and peak hype for the market, bitcoin’s value has since collapsed, rebounded, and stabilized. Likewise, the ICO boom, which saw billions raised for blockchain projects and contributed to the sector’s rapid expansion, has fizzled as many of the services and applications that raised capital have failed or disappeared.
Even so, the industry’s, momentum continues unabated, driven by consumer and investor optimism, and an increased interest from institutional investors and enterprise businesses. After a relatively weak 2018, 2019 looks to be a year of tremendous opportunity for crypto. A series of major announcements, events, and factors could converge to finish pushing crypto over the fence and into the mainstream full time. From an increase in crypto CFD trading to the introduction of financial and banking tools geared toward facilitating cryptocurrency transfers and payments, these are the events that could define the market in 2019.
Trading Contracts for Difference (CFDs) has become one of the more popular activities for retail traders to gain exposure to a broad range of assets, often with leverage. More recently, several companies in the industry have added cryptocurrency CFDs to their platforms offerings, providing a new entry point into the market while generating interest among traders that have been historically focused more towards traditional assets.
In a study of its own platform, for instance, eToro found that nearly 73% of users who signed up between 2016 and 2018 invested in crypto CFDs. Still, some see the enthusiasm for crypto CFDs waning. MTrading, for example, has recently announced it will stop offering its crypto products, though so far, they seem to be more an exception than a rule.
Overall, however, the CFD market for cryptos seems ready to take the next step. Even existing crypto exchanges like CEX.IO have recently announced they will be offering crypto CFDs, a move that could be huge for exchanges seeking to onboard traders who are less familiar with the digital asset ecosystem and inner workings. As CFDs become more commonplace across the industry, more traders who are less blockchain-savvy could gain exposure, leading to higher volumes and a more vibrant ecosystem.
One area where crypto continues to lag traditional markets is in terms of the tools available for banking and taxes. Although cryptocurrency trading has become a more popular activity, most investors have a difficult time keeping their banking and taxes in order when it comes to declaring their digital assets. Most countries where crypto is popular and legal have created laws for taxing earnings from trading cryptocurrencies, but service providers have not made it easy to include these in tax filings.
Now, several promising trends in this area could signal a much bigger acceptance of the industry. Perhaps the most notable news is that Ernst & Young, one of the major accounting firms in the world, is launching a tax tool for cryptocurrency holdings. The Crypto-Asset Accounting and Tax Tool (CAAT) is designed to help users calculate their taxes on crypto earnings. The announcement is similar to that made by TurboTax Online, which partnered with CoinTax earlier in 2019 to offer a similar crypto tax calculator.
In a correspondingly momentous announcement, crypto lender BlockFi announced that they would be creating a bitcoin-based interest account. Backed by the Winklevoss twins’ Gemini exchange, the account will allow users to receive their interest in either Bitcoin or Ether. When this news is taken with announcements like Ohio’s notice that users would be able to pay their tax liabilities in cryptocurrencies, the increase in banking ease is an incredibly positive sign for the growth of the crypto market.
The news that Starbucks was exploring its crypto possibilities lit up the web last year, and it seems like 2019 will light the spark for more companies to join the coffee giant in welcoming cryptocurrencies. Currently, Starbucks is a major equity holder in Bakkt, a cryptocurrency platform, which it will use to accept cryptocurrency payments at its locations.
Likewise, companies like Microsoft have integrated crypto payments into mainstream touch-points such as depositing funds into user accounts for gaming and entertainment. More recently, payment processor Square announced that it would enable its POS devices to accept cryptocurrencies, a major win for the crypto industry.
The importance of these major companies integrating cryptocurrencies cannot be overstated. Despite its meteoric rise, the crypto industry remains relegated to niche status because most coins have limited fungibility in real world transactions. One of the biggest barriers was the incredible difficulty of paying with crypto. As those roadblocks fade, the industry is likely to encounter growing interest that will contribute to its overall expansion.
One of the most contentious and controversial issues in crypto over the past year was the uncertainty around Bitcoin ETFs. While 2018 ended with no clear resolution, the industry is already gearing up for a fresh attempt in 2019. A recent filing by NYSE Arca and Bitwise in February reset the clock for the SEC to make a decision on whether to permit the crypto-drive instrument to be traded on exchanges.
Many experts have expounded on the potential implications of Bitcoin ETFs being allowed, and they could be significant for the crypto industry. Institutional investors have signaled interest in the possibility of crypto ETFs, and their allowance could mean a new influx of cash into the market. More importantly, it would be yet another sign that major regulators are fully on board with the crypto industry, adding legitimacy and trust.
2018 was decidedly a bad year for crypto. After experiencing historic peaks in 2017, the year took the wind out of the industry sails and forced it to adapt. After a year in a bear market territory, it seems the cards are set up for crypto to not just break free of the slump, but also continue its momentum forward and upward. Should these events have the expected impact, 2019 will see crypto become not just more popular, but a growing part of mainstream existence.