Cryptocurrencies- Latest Developments

Above all, for many market participants the year, 2019 will be connected with “Libra”, Facebook’s “stable coin” and possibly also the announcement by the Chinese Government that it will establish its blockchain strategy.

Apart from that, many exciting new technical developments remained in the background; and we are still far away from the significant breakthrough not at least due to the lack of usability and interfaces of many applications compared to the established internet applications. The prices of numerous cryptocurrencies also correlated highly with the still dominating Bitcoin, i.e. they were not able to convince with their “own intrinsic value” based on their specific applications.

The utility tokens with their “Initial Coin Offerings” (ICO) are dead, long live the Security Token Offerings (STO). The German Government has taken a leading role in Europe with its regulatory framework for security tokens, and the first digital securities which were supported by a BaFin (German regulator) prospectus, could be made available to retail investors. Many service companies are working intensively to “tokenize” new companies and real estates to transfer shares of assets or “values” faster and cheaper compared to today’s processes. Besides, secondary markets are expected to gain further momentum, made possible by regulated and established stock exchanges.

Will 2020 become the year of the Bitcoin, as predicted by many market participants, some of them even predicting that stock prices and profits are shooting up? Cryptos do not yet play an essential role in the international investment markets, but the first asset managers and family offices have already detected the potential. The number of regulated financial products on Bitcoin (funds, derivatives) is continuously increasing, and the unstable political and global economic situation should favour the trend for “safe-haven” investments in Bitcoin as an asset uncorrelated with other asset classes. In May, there will also be the so-called “halving”, which means that the reward for the “Miners” will be reduced from today’s 12.5 Bitcoin per block to 6.26, which in the end may result in a shortage of supply with constant demand and could trigger price increases. 

Besides Bitcoin and security tokens, a trend towards new decentralized applications coming from the established finance world, emerge, such as safe custody or solutions in the area of client identification and money laundering prevention.

All in all, the preconditions exist for cryptocurrencies and Bitcoin to experience significantly more visibility and popularity from existing and new market participants this year.