by Mary Ann Callahan
5 months ago
It’s no secret that cryptocurrency exchanges have been in a major slump for a few years now. Each time prices seem to be headed for all-time highs, they drop straight back down again.
It can be difficult for those who follow the Bitcoin price to make sense of the situation. Some people are starting to say that the crypto industry is preparing for a boost in 2020. Here we’ll look at some of the core factors that could drive a crypto industry boost, and whether these claims have any value to them.
A long period of consolidation
A few years on, it’s easy to see that the latest crypto bubble in 2017 had no real legs to it. It was driven by hype and the “fear of missing out” among inexperienced investors. The price went far beyond the true value Bitcoin could offer in those days.
Since then, the market has gone through major consolidation. The price dropped drastically and stayed down for an extended period. Bitcoin has been thrown back to reality. Many people who bought Bitcoin and altcoins for the wrong reasons (to get rich quick) have mostly left the market, and they probably won’t be back anytime soon.
Many Bitcoin investors are no longer interested in short-term hype-drive price inflation. The real question is whether there is a better case for large-scale Bitcoin adoption now, or if the technology is still underperforming for its price.
Getting past the hype and into real applications
For Bitcoin to have a sustained boost period, there will have to be some solid reasons behind it. It’s very unlikely that hype will be enough for the next crypto bubble. Luckily, there are some good arguments that Bitcoin is in a much better position right now than it was just a few years ago.
The first is technical development. Bitcoin is on the verge of gaining exponentially more network capacity. This is down to ingenious technical improvements from blockchain developers. The problem was largely unsolved back in 2017 during the last big boost and really caused some usability problems during peak usage. This problem could well be a thing of the past soon, and investors and users will have evidence that Bitcoin can handle transaction volume at a global scale.
The great thing about blockchain networks is that they are largely open-source. Developments in one network are often fully or partially transferrable to another network. If Bitcoin can prove scalability for a large number of transactions, it will open the door to many more cryptocurrency networks to do the same thing. This will give a boost to the entire industry.
Another key point is clarity on regulation. Governments and regulators are starting to come to grips with cryptocurrency. Many governments have officially published rules and guidelines for investors and users of Bitcoin. Taxes and ownership laws have been clarified, so investors don’t need to worry as much about getting thrown in prison by accident.
This is a good thing for cryptocurrency, as it allows for startups, developers, and investors to plan ahead long into the future on large-scale crypto projects. Something that simply wasn’t possible a few years ago due to extreme uncertainty over crypto.
Big money pouring in
The sleeping giant of the crypto world is big money investors. They have trillions of dollars waiting to be invested in new technologies like cryptocurrency. It’s these super-investors who could really take cryptocurrency prices to the moon. However, they’ve been largely hesitant to jump on the bandwagon for many good reasons.
These reasons are starting to change though. Major banks used to laugh at cryptocurrencies. Now, major international banks are releasing official statements claiming a cryptocurrency could go global very soon. This is a big deal and change of sentiment for the crypto industry. Once banks and financial institutions start investing, there is almost unlimited money on the table. From there, a snowball effect could take prices to unimaginable levels.
Another interesting factor is the launching of cryptocurrencies by big companies and governments. Facebook plans to make its own cryptocurrency a global standard, and the Chinese government is launching its own digital currency too. These new additions to the market could lead to a crypto boost in a very different way, or shortcut the widespread adoption of crypto.
This is all great news, but there are still some major obstacles to a long-term crypto market boost. The main one is whether people actually want to use it.
Bitcoin and cryptocurrency have been around for years now, and are still struggling to find real-world use cases that are worth shaking up our financial system for. The fact is that in the developed world, the current banking system isn’t bad enough for people to start jumping ship and joining the crypto revolution.
A crypto boom will need to be mainly driven by large amounts of people actually buying and using cryptocurrency. Unfortunately, getting them on board is proving to be slightly more difficult than many Bitcoin purists have been claiming for years.
Always Stay Cautious
Cryptocurrency is, and probably will be, very unpredictable. It’s fun to look at the key factors and try to guess when the next big price breakout will be, but ultimately nobody knows.
Because of this, you should always act with caution when investing in cryptocurrency. You might hear a convincing argument that Bitcoin will explode any day now, but don’t get caught up in the hype. Certainly don’t sell everything including your house like some people did. That’s a recipe for disaster. Stick to investing only what you’re happy to lose, and you’ll stay safe no matter where the cryptocurrency market goes.
Cryptocurrency is one of the most exciting inventions ever, and it’s made some big progress since its last crash. Its next big price rise could be around the corner. Whatever happens, it’s going to remain a fun ride to be in the cryptocurrency market!
About the author
As an expert on Bitcoin-related topics, Mary Ann Callahan found herself as a Journalist at the CEX.IO cryptocurrency exchange. She writes articles related to blockchain security, bitcoin purchase guides and bitcoin regulations in different countries.
Please note: This is third-party content and does not represent an endorsement by Blocks99, nor does it necessarily reflect the views and opinions of Blocks99 and its editorial team.
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