Fear, uncertainty, doubt rule the markets as crypto matures: what do we see as the five top unanswered questions as we approach 2019? There’s a ton of speculation going around the markets as we head into the new year. Many analysts including myself see a new round of bullish momentum starting around January 2019. Some analysts believe the bottom may end even earlier, while others see the bearish momentum to continue longer, bringing Bitcoin’s price down to as low as $1,500. There are definitely many uncertainties in the crypto market that keep the crowd guessing. Today we’re looking at the top five topics that are casting doubt over the cryptocurrency industry.
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1- Bitcoin ETFs
One of the most exciting events crypto investors are looking forward to, is the approval of a Bitcoin ETF by the SEC. Many anticipated it as a major catalyst for the return of a bull market in case it happens in January 2019. But there is a good chance that we won’t see a Bitcoin fund anytime soon. Just last week, Jay Clayton, Chairman of the Securities and Exchange Commission, told the audience at CoinDesk’s Consensus event that crypto investors should “Get their act together,” because investors who trade ETFs expect that its underlying commodity “makes sense and is free from the risk of manipulation.” Jay rightfully believes that this is “an issue that needs to be addressed” before he feels comfortable approving a Bitcoin ETF. These harsh remarks have made many market participants doubt we’ll see an approval of a Bitcoin fund any time soon.
2- SEC investigations of ICOs
Talking about the SEC, the second unanswered question in the crypto world revolves around SEC investigations of ICOs. While the industry as a whole can benefit from more ICO regulations, we still don’t know what the SEC has up its sleeves next. Which ICOs are they going after? How many? How soon?
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3- Security Token Offerings
The third topic is around Security Token Offerings – will they lead to the tokenization of more tangible assets, and how will they change the profile of the average investor?
Number four is utility – 2018 was not the year of crypto, it was the year of questions about crypto. Can we expect to see mainstream adoption of some platforms – like XRP, Tron, or Dash – in 2019? Will project teams that promised products in 2019 actually deliver?
5- The global economy and the US stock market
Last but not least, is the global economy and the US stock market – will crypto be correlated with any major recession, or will it prove to be a safer harbor for institutional investors?
Bonus Uncertainty: how will the continuing negative media blitz affect public perception?
A recent study showed that mainstream media stories increase as prices drop; will the negative narrative change if the prices begin to rise again? There you have it. A lot of questions, and no concrete answers. Just like in traditional markets, uncertainty creates fear. And fear, of course, prevents investors from committing too strongly to the market. When you add doubt about the technology and its progress into the mix, you have a poisonous combination.
Fear plus Uncertainty plus Doubt equals FUD. When the FUD is strong, the market is weak. And that’s the real driver behind the continuing bear season. But once confidence returns, I expect to see real movement in the markets, and quickly. I’d obviously love to hear your thoughts about all this. Let me know in the comments, and subscribe to get more updates.
Don’t forget to complete your risk management due-diligence before developing your investment strategy.