Justin’s note: Last year was rough for the cryptocurrency market.
Bitcoin saw its price plunge 72%. Ether – the second-biggest crypto in terms of market value – fell 82%, while many smaller cryptos crashed by more than 90%.
These are staggering declines. But this is nothing new for the space.
Bitcoin’s price has plunged 70% or more six other times since it was created in 2009. Each time, it’s bounced back stronger than before.
Of course, history doesn’t always repeat itself. So I recently called our in-house crypto expert, Disruptive Profits editor Marco Wutzer, to see what he expects for 2019.
Justin: Marco, last year was a rough one for the cryptocurrency market. What do you expect now that 2019 is underway?
Marco: We’ve obviously had an impactful bear market in crypto in 2018. Pretty much all of last year was a downtrend.
Bitcoin was relatively stable for several months around $6,000. Recently it has dropped to between $3,000 and $4,000.
This is what I like to call the “capitulation phase.” It’s the last phase in a bear market, in which the last weak hands throw in the towel. But this phase will most likely go on for a few more months.
I think we will continue around current price levels or even a bit lower for a couple more months. Then, we’ll form a bottom and enter the earliest stage of the next bull market.
When the market actually turns around, we’ll have a slow rise from the bottom. We won’t have lots of positive sentiment and excitement. This needs time to build, especially coming out of a capitulation phase.
So I expect a slow climb over 2019 once we get out of the capitulation phase.
We are in a time for accumulation. Hopefully, a sustained move up from the bottom and an upward price trend will give subscribers who are uneasy about the current state of the market more confidence again.
Justin: Got it. Should investors harvest profits during this time?
Marco: No, it’s not time for that yet. But this will be a good time to accumulate more of the best projects at really great prices so we’re prepared for when the market comes out of this bottoming phase and for when we see significant price rises again.
That’s what I foresee in terms of pricing.
Justin: What about the Blockchain Ecosystem? How is it evolving?
Marco: That’s a different story. There has been a lot of progress. We have a very big disconnect between what’s happening in the Blockchain Ecosystem and what’s happening in the markets.
Right now, a lot of the next-generation, high-speed blockchains are in the final testing phase. This means their technology is basically done.
They’re making sure it has no bugs. They’re making sure it performs well. They’re making sure it’s secure.
Once the testing phase is done, they will launch the actual blockchain and you’ll be able to use it. Then, it will be providing actual value.
And many of the most important and largest projects will go live with their product in the first and second quarter of this year. A lot of new services will become available, providing real utility and real value.
Justin: What does all this mean for the ecosystem?
Marco: Everything will become faster. Everything will become easier to use. Everything will become better and more valuable because it will work better and many additional services will become available for the first time.
It will be a very exciting time of progress for the Blockchain Ecosystem. But, again, we have a disconnect in the sense that the Blockchain Ecosystem is becoming much better but the prices still have to catch up again with this development.
In 2017, prices got ahead of where we really were in terms of the development of the Blockchain Ecosystem. Excitement took over, and prices got too high.
In 2018, sentiment got too negative and the prices are now too low.
And I see this disconnect continuing for some time this year because of so many good things happening in the development of the Blockchain Ecosystem.
It will become so much more valuable and easier to use. The prices then have to catch up with these improvements, which will then eventually lead to more excitement again, and a new bull market. But right now, there is a disconnect between the value of the ecosystem and the current prices.
Here’s the important takeaway: The development of the crucial pieces that make up the Blockchain Ecosystem is making good progress and everything is going exactly as it should be going. So prices catching up with this development is really just a matter of time.
Justin: What are some of the most exciting developments happening in the blockchain space?
Marco: I mentioned new, high-speed blockchains. That is important because many new people will be coming into the Blockchain Ecosystem to use cryptocurrencies and crypto-based services. And we need more capacity than current blockchains can deliver.
This has been an issue already in the past when Ethereum got clogged up by too many users or by applications that had just a few thousand users.
This year, we will have the infrastructure in place to have a lot more scalability. So when the next wave of growth with many new users hits, it won’t be causing any problems and it will be a smoother experience.
And the user experience is also getting better. We have a lot of new tools that make it easier to deal with cryptos, making it more user-friendly.
The wallets get better all the time. There are several new hardware wallets coming out that will make it much easier for people to use cryptos.
Overall, the quality of the user experience has fallen a little bit behind. And we’re seeing a lot of projects catching up with this.
A better user experience and improving capacity of blockchains are the two key points.
Justin: What about institutional money coming into the space?
Marco: There has been a lot of talk about that. People have expected it for a while. Until now it hasn’t happened. But all the infrastructure, all the custody solutions, all the new exchanges, all the new platforms, the first crypto ETF – all of this will eventually happen. And most likely sometime this year we’ll see the first wave of this.
With these three things coming together, the infrastructure being there to handle a larger volume, the user experience becoming better, more products and services being available to make it more useful, deliver more value, and then big money from institutions arriving – this is all a good thing for the Blockchain Ecosystem. All of this is pushing us forward and will eventually lead to the next bull market.
Justin: What about from the regulatory side? Any potential catalysts that we should be watching?
Marco: I’m not a fan of regulation. But it’s part of the world we live in.
There are a number of countries that are forward-looking and very crypto-friendly… and you have other countries that are more reactionary and less crypto-friendly.
Overall the rules are becoming much clearer, not just in the U.S., but everywhere. That’s a good thing.
Initially, people just did what they wanted, not considering any legal implications. Now, a lot of projects are in trouble, especially with the Securities and Exchange Commission [SEC] starting to crack down on some projects. They are going to have to pay fines, and return money to investors.
In the U.S., two congressmen have just introduced a bill, the “Token Taxonomy Act” that seeks to change the SEC’s 72-year-old definition of securities. The bill would exclude cryptocurrencies from the definition of a security once they become a functioning network.
The SEC in principle also has no problem with ICOs as a method for raising funds. It just wants you to follow certain rules. Little by little these rules become clearer, and as they become clearer, it’s easier and less risky for new start-ups to employ these crypto-based funding mechanisms.
The current regulatory developments give more clarity and that’s a good thing in the sense that it gives security to investors, that they know that they can safely put their money in a new offering if it follows the rules of the SEC and so on.
Clarifying the rules and updating regulations is important for any country’s economy if it wants to stay relevant, especially when it comes to the tokenization of assets.
However, the biggest profit potential I see is in completely decentralized projects that enable a supra-national global economy, completely outside the realm of outdated nation-states.
Justin: Great stuff. Thanks, Marco.
Marco: You’re welcome.
Justin’s note: Marco’s Disruptive Profits newsletter is unlike any other cryptocurrency advisory I’ve ever seen. Marco scours the crypto markets to find the highest-quality projects for his readers… ones that you won’t hear about from the mainstream media. To learn how you can become a Disruptive Profits subscriber and access all of Marco’s research, click here.
Today, readers respond to Doug Casey’s recent interview on Syria and Afghanistan.
Enjoyed the article. I was an infantryman in Vietnam in ’68 and I was certain we would never make that mistake again. Well we got Syria, Afghanistan, Libya, and Iraq. We nearly collapsed Egypt and next up is Iran. Our one ally in the region loves it. It was obvious that the hodgepodge of religions, ethnicities, etc. would collapse those countries into chaos and to some, better to have chaos than a secular, modern state armed with Migs and Russian tanks. I think one area where you are mistaken is the public’s acceptance. Trump voters proved there was a lot of anger and absolutely no place to put it. Keep writing.
Doug: You are so on target, I relish reading everything you write. Thanks for sharing your "out of the box" remarks with us.
I agree completely with Doug on American war policy. I don’t understand how, as a country, we can keep sending our young men into these sh*tholes to be killed for no reason and no one seems to care. The government has continued to finance the military above all else to funnel that money back to the deep state.
I would encourage Doug to read the book, Hammerhead Six. It details the only successful “venture” I know of by the U.S. military in the last half century. While I support Doug’s thesis that the Deep State has done the wrong thing in pursuing the wars that we have since WWII, there is a proven way that the military can be a positive force if they take a different approach.
The 19th Special Operations Force National Guard unit did things vastly differently than the regular Army that replaced them. While the book is now required reading in some military circles, I doubt the concepts that were practiced by this particular A Team have not been repeated.
And one reader thinks Doug should be president…
Doug is spot on with his thoughts on Iraq, Syria, and Afghanistan as well as Libya. It was the first opinion that I have seen in years that was so close to the mark on these horrific events that we have had over the past 20 years over U.S. aggression. Doug should be the President as he is a realist who speaks the truth without resorting to bullsh*t. He also knows his history. A great piece, thanks.
As always, if you have any questions or suggestions for the Dispatch, send them to us at [email protected].