Crypto in 2020 🚀

It’s a new year and a new decade. The crypto industry is constantly in a state of change and therefore the only certainty is that tomorrow will look vastly different than today. It is what makes this industry exciting and offers great opportunities to capitalise on. Building on our note from August 2019 “5 reasons to consider adding the DCX10 to your portfolio” we look at what 2020 may hold. This breakdown is by no means exhaustive and had to be cut to be manageable. That in itself is bullish as it shows how much is happening in this industry.

The Bitcoin halving: The importance of this event cannot be overstated. In May 2020 Bitcoin will go through a programmed halving of the block reward allotted to the miners who maintain the network on which it runs. This means miners who contribute computing power to the security of the network will receive half the number of bitcoins for each block they successfully mine. In other words, the amount of Bitcoin minted per day is cut in half. This will put significant pressure on the supply and logic follows that the price should rise as a result. Important side note, Bitcoin Cash(BCH) has an expected halving in early April 2020 as well. BTC is 77% and BCH is 3% of DCX10.

Bitcoin dominance: Bitcoin’s dominance (percentage of total crypto market cap) is STILL touching 70 percent, going on 6 months now, a level not seen since April 2017 just before the previous crypto bull market when Bitcoin was overshadowed by the alternative coins (‘altcoins’). DCX10 gives you exposure to both BTC and altcoins — whether history repeats itself or not, you’re covered.

Facebook’s Calibra: Facebook’s Libra project has had a few setbacks, from being grilled in front of the US congress to some regulators outright opposing it. The plan is to launch a wallet to store and transfer a stablecoin by June 2020. “Banking the unbanked”. While mixed reactions in the crypto community, an optimists take would be that it will surely bring more people and capital into the space.

Retail and institutional investors: While we have yet to see the approval of a Bitcoin ETF, other cryptocurrency derivatives such as regulated Bitcoin futures are showing meaningful traction. Retail investors were also bullish. The retail payment app CashApp that offers Bitcoin saw record $148M BTC purchases in its third quarter. Investment platforms continue to add crypto to meet the demand by investors of all ages looking to gain exposure. 2020 should be no different?

“DeFi,” or “decentralized finance”: Decentralized lending, derivatives, exchanges, prediction markets, etc. For now, a sector that has gained traction in DeFi is a way for people who are already long Ether or Bitcoin to earn interest. Will it attract new users to crypto assets if they are able to earn interest similar to fiat in a bank? Ethereum makes up 9% of DCX10.

Ethereum 2.0: Ethereum since inception in 2015 has operated much like Bitcoin. Both Ethereum and Bitcoin currently operate on a “proof-of-work” consensus model. Some time early this year, Ethereum developers expect to overhaul this design for a new one called “proof-of-stake.”

Death of the ICO: Initial coin offerings,ICOs, are winding down thanks to concerns with funded projects not delivering and regulatory hurdles from selling tokens (regulators might view them as securities). This can be seen as bullish to crypto as outright scams and failed projects have scared retail investors away.

Central bank digital currencies: In 2019, Beijing’s talk of a digital yuan made China the first major economy on a path to issuing its own digital currency. The ECB now under Lagarde have reiterated that they are “looking into a digital currency”. How would a digital currency change crypto? Optimistically much like a private stable coin from Facebook/Libra, it would attract new users and capital into the space.

From a South African perspective.

A potential weakening Rand: The Rand had been resilient these last few months, strengthening from R15.50 to the dollar touching R14. This on the back of load shedding, growth forecasts revised downwards and a ratings downgrade looming. The Rand will likely remain volatile as SA specific issues are worked through. Since DCX10 is exposed to the top 10 Cryptocurrencies, mainly traded against USD, it likes a weak Rand.

Flight to safety narrative: Is Bitcoin digital gold? Heated debates on social media continued regarding this narrative since August. Then something interesting happened. Tensions flared up between the USA and Iran, some even dubbing it #WW3. Gold and crude oil spiked, and so did Bitcoin. Does that put the argument to bed, no, but it is definitely something to be aware of. Gold is reaching 7 year highs and many gold bulls are excited for 2020, this is definitely bullish for Bitcoin.