I hope 2019 started well for all of you and in the new year you will achieve your goals. Today we will talk in general about how to become better in trading, investing and forecasting markets. I want to pay special attention to how to share expectations and reality, given our hopes for 2018 and its actual results. Like many, I was optimistic in my assumptions, but I was wrong and learned certain lessons from it.
2018 was a year of various trends, some market participants marked it as the year of legislative regulation, others as the year of security tokens. In reality, 2018 was a year of technology evolution with the release of the Lightning Network, privacy solutions, etc. However, for all the positive moments, we should not forget how many of us were mistaken in 2018.
I was sure that support for $ 6,000 would be withheld and the price would only grow from this line, but this did not happen. With the fall in Bitcoin prices, the entire market became much cheaper and it was painful to watch. The events that took place strongly differed from my paradigm that cryptocurrencies would become a widespread method of accumulation and would play the role of traditional currencies. I was fascinated by the possible influence of cryptocurrency on the world market, as I constantly studied them, and my expectations were premature. I think that many in 2018 had this problem, especially after my travels around the world, for which I managed to meet many people with different experiences, but similar views.
It seems to me that in 2018 I overestimated the size of the blockchain space. Now our ecosystem is less than 1% of the total world population. In this sense, the cryptocurrency market now resembles the Internet in 1994. However, this is also a positive factor, since it implies a great potential for financial growth and technological development. We are facing the expansion and development of blockchain technologies and their massive integration over the next 10 years from 2020 to 2030. We will still have our own dotcom bubble, followed by another wave of innovations. The transition from traditional to cryptocurrency takes time, given that there are no serious problems in economies, as in Venezuela.
Undoubtedly, most of my price forecasts were wrong, but it turned out to be right about Deutsche Bank. I believe that at some point the affairs of the bank will become so bad that they will need help from the state in 2019-2020. In my opinion, Deutsche Bank, with its unsuccessful business model, is a weak link in the global economy. However, it keeps for a long time despite a long bearish trend. Thus, I want to get away from specific predictions and try not to look at things as radically as before.
The financial sector also suffered in 2018, indices fell by 30–33%. To some extent, this indicates to us the vector of its further development 10 years after the financial crisis of 2008, in 2019-2020. In this regard, I was also close to the truth: interest rates are rising, stocks and real estate prices are starting to decline. However, I was wrong, expecting a more serious decline.
Given my experience in 2018, what about 2019? It is very important to stop looking at the world radically, not to look for only 2 possible scenarios. Take, for example, cryptocurrency. Some experts believe that they will never win universal popularity. Their opponents are confident that the cryptocurrency is the salvation of the entire financial system, where everyone will become their own bank, and all this will happen very soon. In fact, neither are right. I urge you to consider things happening from different angles, as they are much more complex than it might seem at first glance. Speaking from a conspiracy point of view, the world is not subject to one group of people, but to different groups with different interests. The main lesson of 2018 for me was that the world is not simple and, if we can predict an event, then we definitely don’t need to define a specific date for it.
Two things that deserve attention in 2019 have already been discussed quite a lot. Firstly, this is the potential adoption of Bitcoin ETFs in February, which many expect, but which, I believe, may not happen in the end. Returning to the topic of radical views, you need to understand that it may take longer to adopt an ETF. SECs see that the problems of the crypto market do not go anywhere, Bitcoin is still under the manipulation of several major players, volatility is still present. It should be noted that in the traditional market there is already an ETF with a leverage of 3x for almost any asset, some of which are much more volatile than Bitcoin. And yet, I think the SEC is waiting for large volumes, a greater distribution of coins between market participants, so as not to worry about manipulations and possible price drops by 50% in two weeks. Despite this, the rejection of the application from VanEck will not affect the prospect of introducing the ETF itself, since the application will be re-submitted and the SEC will accept it when it is ready. I hope this happens in 2019, but I’m not sure that it will be in February.
Most recently, the Bakkt platform has collected $ 182.5 million, but this is not very encouraging to me. I am more interested directly in its successful launch and influx of users. I wish them good luck, I think that this project is led by the best people you could wish for. I believe that Bakkt definitely can affect the market, but you need to wait for the actual results of the launch.
There is something that I would like to pay more attention to than Bakkt and ETF, and this is the integration of cryptocurrencies in developing economies. Yes, this is a slow process, but it is precisely as a result of the spread of cryptocurrencies in countries with developing economies that the cryptocurrency market can reach 3-5% of global integration.
We see that within the United States pass insignificant volumes of cryptocurrency transactions on LocalBitcoins, which is not the case with Russia from 26.5% and Venezuela from 12.2%. China, despite the government ban, conducts 9.7% of all transactions on this platform.
I think that for at least some predictions we will need to wait for May 2019. However, I still make some assumptions now. I believe that the 3 largest developing economies of the world: Russia, the USA and China will have serious difficulties when it comes to their national currencies. India and China will suffer from the shadow banking sector, which plays a huge role in these countries. Russia will fall under the pressure of low energy prices. As a result of such problems, people will be more and more interested in cryptocurrencies and enter this new market for themselves, which will have a positive effect on both prices and volumes. Also, I am confident in accepting the Bitcoin ETF, most likely this will not happen in February and not even in the first half of 2019, perhaps the situation will resemble the introduction of Bitcoin futures in December 2017. Finally, I think that this year we will witness a correction market share by 40-50%.
As for the price forecast Bitcoin, I will refrain from specific numbers. I think that over the next few months, the market will form a bottom in the region of $ 3,000 – $ 6,000. I’m not sure that Bitcoin will set new peaks this year, at least until the adoption of the ETF.