The cryptocurrency market is once again shifting and swaying violently. December has so far seen serious drops in both token price and market capitalization. Recently a wave of new ones entered the fray and pulled the price of BTC of even further down. It goes without that this left many individuals and event companies truly concerned. Furthermore, no one is sure how long this will last and where will bitcoin find its bottom. Thanks to these changes the entire ecosystem around cryptocurrencies are waiting for 2020 and hopefully some solution it will offer to the same market.
But, at the same time, few if any are unaware that the same decade will bring on additional challenges. Some of these challenges are currently complete invisible and will come from the left-field one way or the other. Others are more well known and include things like regular halving procedures that bitcoin will experience in the first half of 2020. Yet, in the midst of these challenges is also the possibility of new competition coming to the crypto market scene. While bitcoin did experience something similar in previous years, especially with the rise of the ethereum network, chances are that the challenges of the new decade in this regard will be much more serious.
Almost exactly two years ago, bitcoin hit its highest ever price. At the end of 2017, a single token climbed all the way up to almost 20,000 USD. The meteoric rise of its price took almost everybody by surprise. Even those in the community who have long since hoped for something like this, especially those who have been holding their crypto assets for a long time, could hardly believe this development.
Yes, the period came after a long climb that lasted almost through the year and which took the token price from around 1,000 USD to almost 20 times that sum in less than a year. Since reaching that peak, both market capitalization and price of individual tokens fluctuated wildly. In the domain of cutting edge technology, these changes are somewhat expected. Things like esports competitions and social media principles all continue to see similar drastic changes all of the time. However, in the case of cryptocurrency, the same volatility is actually something that is hampering adoption and institutional investment.
Bitcoin, since it reached its last price high, continues to fluctuate all over the market. In 2018 it fell by almost 73 percent. Then in 2019, the cryptocurrency rose by 85 percent. Still, it did not come anywhere near the previous record. Now, close to the end of the year, it is staying at around 7,000 USD, previously having tested the 6,000 USD mark.
Profitable Investment for Now
In spite of its numerous is the instabilities and huge price movements, bitcoin remains a highly profitable source of investment for those who came in early. That is why an investor who bought bitcoin at the start of 2017 is still going to be up more than 500 percent. S&P 500’s gains for the same period far below measuring only at around 43 percent.
Yet, those who bought in a later than that still had a very tricky time. Because of that, trading during the same period would provide a much lower profit. This is not the only change that the bitcoin network in the whole crypto environment faces in the coming years. While the volatility and price movements remain the focus of the mainstream media, different forces are in play as well. These could undermine the future of the biggest cryptocurrency in the world as of this moment.
Years of Change
Apart from the price action, there have been many changes in the wider ecosystem of the cryptocurrency world. For one, cryptocurrencies are more widely embraced by different institutions than ever. For example, bitcoin futures are offered by mainstream financial entities. Other institutions are actively involved in servicing investors who want to buy into bitcoin or some other cryptocurrency.
While market cap remains too small to entice huge amounts of money from entities like banks, there is a constant pressure for that to change eventually. This is further underlined by overall financial instability expected to rise in the coming decade. While many central banks use the safe haven of gold, it is just a question of time when some of them, especially those from smaller counties, reaching out to cryptocurrency to build a reserve to fiat currency counterparts.
Simultaneously the pressure from alternative cryptocurrencies or altcoins has drastically faded away. In 2017, the market was full of initial coin offerings which seemingly created new cryptocurrencies on an hourly basis. Today they have mostly faded away and the winners are fighting for the overall market and its current and future users. Here, bitcoin is still keeping an overall piece of the market value at nearly 70 percent. Still, this position is nowhere near secure thanks to the same factors.
On the one hand, the competition coming from alternative currencies has died out. However, many other powerful players have become convinced that cryptocurrencies are the way forward. Two main groups will present rising competition to bitcoin. First are huge multinational companies, which will try as hard as they can to muscle into this lucrative market.
The other group is central banks themselves which are tirelessly working on creating their versions of digital tokens. The central bank of China is probably the best example of this rising trend. Chances are that it will have a digital token of its own in the next 18 or 24 months from now. In this setup, bitcoin has a lot of reasons to be worried about its future, not in terms of existence, but general market dominance.
Both of these competitor groups have a lot of resources behind them, as well as institutional legitimacy. Their challenge to bitcoin in the coming decade is an almost certain possibility. To keep its current position bitcoin will also need to change and evolve so that it can stave off these serious competitors.