Being aware of the potential near-term catalysts can provide insight whether to buy, add, hold, move, or sell your cryptocurrency positions. During the next 12 months there are a number of ongoing developments that may drive price action of specific coins in both positive and negative ways. Here is a short list of potential catalysts for 2020. By no means is this list complete.
If you think of other transformative developments that I missed feel free to add a comment below.
Cryptocurrency catalysts for 2020
1. Bitcoin will experience another reduction in its block reward (halving) expected in May 2020.
Around every 4 years since Bitcoin began the reward that miners receive for finding a block is reduced by half. The reward per block mined will drop from 12.5 BTC to 6.25 BTC. This is part of Bitcoin's design to become progressively scarcer over time. It should result in increased demand, and push the price higher. Previous halvings have resulted in the start of bitcoin bull runs and there is a lot of anticipation that this halving will be the same, leading to another bitcoin run up in the second half of 2020.
Recommended Actions: 1. buy BTC until the halving date (May 2020). 2. hodle your BTC through 2020.
2. Ethereum Implementing Proof of Stake.
Ethereum continues to work on adopting Proof of Stake (PoS) into its blockchain network (ETH 2.0 or Serenity) with the sharding Phase 1 and 2 will come in 2020 and 2021, respectively (assuming that the Beacon Chain launches in early 2020). Sharding is a proposed scaling solution for the Ethereum blockchain (Zilliqa another cryptocurrency already uses sharding). The implementation of Serenity will solve some major issues faced by the Ethereum blockchain.
Recommended Actions: 1. buy ETH as implementing its PoS will be a positive catalyst in the long term. 2. hold your ETH through 2020. If a BTC bull run starts (see #1) it will, as in previous bull runs, pull ETH to higher levels.
3. Ongoing digital cash (centralized) developments.
Digital cash systems created by governments to streamline financial transactions using parallel fiat and digital currency will continue to develop. Countries such as Russia, China, and BRICS nations made announcements to begin using digital versions of currency. The digital Yuan will begin its test phase in early 2020. Although the impact of the digital coin issued by China’s central bank (CBDC) is unknown, it is emerging as a strong competitor to the European Union’s ambitions to issue a digital Euro.
Recommended Actions: Ignore. Digital cash in 2020 is likely to have little impact on decentralized cryptocurrency developments unless decentralized cryptocurrency is banned to promote centralized digital currency. While there is much talk of digital currency from the top down there is very little organic growth or community support for many national currency initiatives. Governments just don't have the infrastructure in place yet for a full-on roll-out of their centralized currencies. If Venezuela is any example centralized currencies may be shunned by the population. Few embraced the PETRO in Venezuela choosing bitcoin (a decentralized coin) as a store of wealth beyond the reach of government officials.
4. Facebook's Libra coin is on a fast track for development and its blockchain implementation.
Facebook plans to work on the protocol architecture for the Libra mainnet to be released sometime in 2020.
Recommended Actions: Watch. Libra is being fast tracked but its impact likely won't be felt until after 2020. Many Millenials have shunned Facebook which does not bode well for adoption by younger users. Libra is not a decentralized cryptocurrency. Those who use Facebook will be on-boarded to Libra but its mass adoption and use will likely be less than anticipated by the big partners. The mass numbers of new users exposed to the idea of Libra may result in more people entering and buying other cryptocurrencies.
5. Other Social Media cryptocurrency
Beyond Libra and Facebook there are other social media applications also plan to make their own crypto such as telegram with TON, LINE with line network and KakaoTalk with Katlyn. Twitter, is also looking to create a successful payment system using blockchain technology and may develop its own cryptocurrency.
Recommended Actions: Ignore. Other social media companies are also looking to cash in on cryptocurrencies to use them as payment platforms. The use case tied to their business will limit the coins utility. It is unclear if the coins will trade outside the businesses platforms.
6. Mimblewimble potential transformative effects for litecoin and bitcoin.
It is believed Mimblewimble could help improve both the scalability and fungibility of bitcoin in a unique way. A Mimblewimble sidechain would be an easy Bitcoin-compatible solution implemented once once segwit is activated.
Recommended Actions: 1. watch for sidechain developments that can improve bitcoin's scalability. While Mimblewimble has great potential it likely may not be implemented in the next 12 months. If positive movement on Mimblewimble occurs rapidly buy BTC and LTC. 2. buy Mimblewimble-based projects. One good project is Beam. Beam is a privacy-focused digital currency that has been catching the eyes of investors in the sector. Beam uses the Mimblewimble blockchain protocol.
7. Continued DeFi development - Decentralized Exchanges (DEX)
Increased development of decentralized finance (DeFi) and blockchain inter-operability. At the start of 2020, individuals (and businesses) can borrow, lend, trade, invest, exchange, hedge, and store cryptographic assets in a trustless manner thanks to the growing number of decentralized finance applications on the Ethereum network.
Recommended Actions: 1. buy ETH. Watch for ongoing DeFi infrastructure growth. This is a slow moving sector that will take years to develop fully. Currently most of the DeFi projects are built on top of the Ethereum blockchain. For example, Compound is an algorithmic money market protocol that runs on the Ethereum platform that lets users earn interest or borrow assets against collateral. Again it is another reason to buy and hold Ethereum. 2. buy Synthetix (SNX). The biggest success story 2019 saw with respect to open financial protocols was Synthetix. Standing at the forefront of financial inclusions, community governance, and the ability to bootstrap liquidity with a native token, Synthetix truly sets itself apart in 2019, and 2020 promises more of the same. 3. buy other DeFi early movers such as MAKER, dYdX, or 0x (ZRX).
8. Increasing digitization of assets.
Tokenized assets provide many benefits for investors such as increased accessibility, accelerated liquidity on the underlying asset, automated compliance and payment distributions and transparent ownership. Tezos made big moves in 2019 with real estate digitization in the UK and the USA. This use of smart contracts (check) will continue to develop throughout 2020. Several DeFi projects built on Ethereum's platform seek to tokenize assets including ECR-1404, Haror, Meridio, Neufund, OpenFinance, Polmath network, Quidli, Securitize, Templum and Tinlake). and also of note is Stellear's Tokensoft
Recommended Actions: Buy blockchain cryptocurrencies involved with asset digitization such as ETH, EOS and XTZ (Tezos). Some early projects with great potential in this area include: Polymath Network (POLY) and EOS based projects (eg. the Tokensoft project).
Many catalysts can be identified that may act as near-term drivers. Being forearmed is forewarned. Stack your cryptocurrencies accordingly... "to be prepared is half the victory" (quoted from: Miguel de Cervantes, from the “Adventures of Don Quixote de la Mancha”).