What happened in Crypto in 2019?
By Inkarias - 2020-01-04
Following the bullish year of 2017, the year back in 2018 proved to be a hard test of both endurance and faith for most cryptocurrency enthusiasts. Out of them, many crypto investors left the market for volatility reasons and financial reasons in general. The bear market took out numerous casualties, projects and well-known exchanges have seen volume numbers drop to new lower levels. Overall, 2019 has been a greater year than 2018 for investors and crypto enthousiasts and have seen some major changes and innovation for the greater good.
The cryptocurrency market is well-known for its high volatility, and 2019 was another roller coaster year. The first half of the year was marked by a tremendous rally which convinced many participants that the post-2017 bear market was definitely over. However, sentiment changed dramatically in the second half, with most cryptocurrencies showing disappointing price action. The first half was marked by an increase of Bitcoin price from ~3500$ during accumulation phase until 13000$+ at its peak in June-July.
The cryptocurrency's total market capitalization was $ 125 billion as of January 1, 2019, and went to $195 billion, an increase of 56%. The annual peak reached just over $ 370 billion at the end of June, corresponding to the peak of the big Bitcoin rally we introduced above.
2019 has seen a real downfall for the interest on masternode based projects. Numerous node services and projects have closed their doors in 2019 for a lack of funding (Gin or Snode for example). In 2017-2018 , masternode projects have known a real craze tied to the innovative vision at that time. After more than one year of experience in that field, it has been proven that masternode prices tends to drop directly once a specific project reaches the crypto market. Thus, there was a major change in investors mind which generated a disinterest for that kind of passive income.
However, even if masternodes were the true gold in past years only, some projects still managed to accomplish great things during 2019 and still remain at top today. Proof-of-Stake consensus and derivatives are now the primary choice for investors to build a new passive income in crypto.
A bloodbath for Altcoins
Altcoins were the clearly the biggest losers in 2019, with one coin after another hitting a new bottom , causing investors to lose -99% in some cases. The volatility of Bitcoin this year generated a real bloodbath for Altcoins , many disappearing or closing doors for bad market and financial conditions. In an honest vision , 2019 was the beginning of the wipe of numerous assets that hadn’t their places in the current crypto sphere.
Bakkt Launch and Crypto Derivatives craze
In August 2018, Bakkt’s parent company Intercontinental Exchange released a statement announcing its intention to use Microsoft’s cloud service Azure to “create an open and regulated, global ecosystem for digital assets.” This new company, dubbed Bakkt, would start right off the bat with the inclusion of federally regulated markets and auxiliary services, like warehousing. After several delays this year, Bakkt finally went online in September.
Anticipation of the launch of Bakkt's Bitcoin futures were growing in the cryptocurrency community throughout 2019 to the point that many had unrealistic expectations about the platform's impact on the cryptocurrency market at launch. While some expected the launch of Bakkt to open the floodgates for institutional money to start flowing massively into Bitcoin, the reality was that its BTC futures contracts started with an extremely low trading volume of few time after their launch. The disappointment was widespread, but Bakkt has started to see its volumes increase and now regularly has more than $10 million in daily transaction volume.
Last year saw the entry of new players into the cryptocurrency derivatives market, which was previously dominated mainly by BitMEX and OKEx. Although these two exchanges are still in leading positions in the crypto derivatives space, they now face serious competitors such as Binance Futures, Huobi, BitFlyer, Deribit, ByBit, Kraken Futures and more. There are also U.S. regulated Bitcoin futures markets such as the Chicago Mercantile Exchange (CME) who posted its highest volume level on May 13, with $ 1.3 billion in futures contracts BTC changing hands.
The Libra Controversy
During the first half of the year, there was a steady stream of reports that the social media giant Facebook was working on some sort of cryptocurrency project. This effort was officially announced in June as Libra, a cryptocurrency designed to maintain a stable value through the support of fiat currencies and government-issued securities. Facebook is not alone in the Libra project because it has obtained the support of several large companies which have joined together to form the Libra Association. However, the fact that companies have joined forces to create a global currency has not been exactly welcomed by regulators and legislators around the world and Libra has received a heavy dose of repression. This likely prompted some of Libra's first donors such as MasterCard, Visa and PayPal to withdraw from the project.
For the moment, Libra is still in development and the Libra Association hopes to launch it in 2020. The announcement of Libra created a huge controversy in the world and in the crypto sphere at a point where the House of Representatives’ Committee on Financial Services has written to Mark Zuckerberg, Sheryl Sandberg, and the chief executive of Calibra, David Marcus, asking for a moratorium on the development of both Libra Coin itself and Facebook’s bespoke wallet, Calibra.
The Financial Action Task Force (on Money Laundering) (FATF), also known by its French name, « Groupe d'action financière » (GAFI), is an intergovernmental organization founded in 1989 on the initiative of the G7 to develop policies to combat money laundering. The Financial Action Task Force (FATF) is an organization made up of 39 member states that develops policies to combat money laundering. FATF members account for around 80% of global GDP. In June, the organization released its advice on how companies dealing in cryptocurrencies should be regulated to prevent money laundering and the financing of terrorism. While each FATF member state will likely implement the recommendations of the FATF guidelines at a different rate, these guidelines constitute one of the most significant developments in the history of the cryptocurrency market in the regulatory field. One of the most controversial parts of the FATF guidelines for cryptocurrency companies is the so-called "crypto travel rule", which requires companies to share information about their customers when more than $ 1,000 or € 1,000 of cryptocurrency are transferred between them.
A revolution in funding systems
Since 2017, many projects raised capital through crowdfunding and initial coin offerings (ICOs) was one of the most important features of the 2017 cryptocurrency bull run. However, the ICO model quickly began to lose popularity on the 2018 bear market and this trend continued in 2019. Instead, a slightly modified fundraising model called Initial Exchange Offer (IEO) emerged.
In short, IEOs are ICOs that are facilitated by a cryptocurrency exchange. The sale itself does not go through a smart contract on Ethereum, EOS, or any other blockchain platform, but is rather conducted through an exchange directly. Top exchanges such as Binance, OKEx and Huobi are just some of the examples of exchanges that have launched IEO platforms. The exchanges generally carry out part of the marketing on behalf of the project and often receive part of the supply of the token in compensation for the hosting of the IEO. Despite gaining a certain traction in 2019, IEOs have failed to generate as much interest from cryptocurrency investors as ICOs did in 2017 and might even follow the same path for 2020 until a new method of funding is implemented widely.
Some important attacks
Cryptocurrency exchanges are still a very risky place to store investors cryptocurrency assets. In 2019, hackers continued to access huge cryptocurrency hiding places managed by exchanges , often stealing millions worth of crypto currencies in few minutes. In total , 6 major attacks occured this year, leading up to millions of loss:
- In January, $ 16 million in cryptocurrency was stolen from New Zealand-based Cryptopia. The damage was so severe that the company went bankrupt and is currently in liquidation process since that period.
- In March, hackers took off with $ 13 million in cryptocurrency from the South Korean Bithumb exchange.
- In May, Binance's hot BTC wallet was hacked. The attackers managed to steal about 7,000 BTCs, which was worth about $ 40.7 million at the time.
- In July, hackers stole $ 28 million worth of cryptocurrency from the Japan-based Bitpoint cryptocurrency exchange.
- In November, attackers compromised the South Korean-based Upbit cryptocurrency exchange, stealing 342,000 from Ethereum. The stolen ETH was worth around $ 49 million at the time of the hack.
What’s coming up next?
Cryptocurrency markets continued to mature in 2019 with the introduction of new trading instruments, institutional quality infrastructure and regulations all across the world. However, Bitcoin performance is likely to continue to be the main driver of the cryptocurrency market and the main story for 2020 will likely be Bitcoin halving which is planned to occur in May 2020. If the sudden drop in the supply of new BTC can have a positive impact on the price of the world's first cryptocurrency, we can expect new investment and increased attention to the cryptocurrency space. In the past, previous halving have been a great factor for Bitcoin interest increase.