NEW TRENDS IN CRYPTOCURRENCY
Let’s face it, the cryptocurrency realm has made serious strides in the last year, with many in the industry referring back to the discovery of the Internet for comparison.
The cryptocurrency market recorded an all-time high of approximately $ 820 billion at the beginning of 2018. In just 12 months, the total value of all cryptocurrencies had soared, and it was a remarkable year in every way. However, over the next few months, there was a massive decline at about 65 percent of the total market cap. Everyone including the mainstream media described the crypto market as dead. Despite the decrease, we cannot deny that cryptocurrencies are still growing rapidly as essential technological assets. The rest of the year is set to be a critical time for cryptos, as analysts, investors, and crypto enthusiast are eager to see how the cryptocurrency market will rebind and continue to grow.
As the cryptocurrency market has continued to explode higher, we’ve also witnessed a couple of trends coming up. Here are the major cryptocurrency trends to watch out for.
The Rise of More Stable Coins
There is no doubt that the virtual currency market has survived a lot of things including the major ban on cryptocurrency ads by Facebook, Twitter, Google, and other platforms, regulations attempts, exchange hacks, interventions by government, and more.
Since the digital currency market is involved with the high level of volatility, these factors have helped in the massive correction in the virtual currency market, from an all-time high of about $ 820 billion at the beginning of 2018 to about $ 260 billion currently.
Following the drop, renowned economists, experts, and other crypto analysts have declared the death of cryptocurrency. But, it is not dead yet.
The high volatility of the currencies in the market renders most token to be seen as an unreliable store of value for everyday transactions. As a result, more stable coins such as Tether are coming up to change the concept of fluctuations by attaching the token’s value to a different asset such as fiat currency.
The understanding is that most virtual currencies are pegged to Bitcoin, and because of the huge prices swings and volatility that are witnessed in Bitcoin, the prices of other digital currencies are affected. The concept of a stable coin is to introduce a coin with a fixed price and not subject to rapid price changes. The coin is pegged to actual fiat currency for stability.
Tether is by far the largest stable coin, and most exchanges are paired to Tether’s USDT which is said to be equivalent to a dollar. The pegging of virtual currency to Tether helps to increase stability especially when there are sudden price swings.
Bitcoin Dominance Will Continue to Soar
The controversy that surrounds cryptocurrencies reached its peak in December with Bitcoin dominating among the virtual currencies. But, cryptocurrency analysts may have noticed that the Bitcoin dominance has eroded slowly where it’s at the lowest point ever. This is compared to the huge jump that was seen in January 2017.
Although Bitcoin has declined for the better part of the year, it can only go up from here. In fact, it won’t be a surprise to see an increase soon. The dominance is hugely based on several factors.
First, despite its high volatility, Bitcoin has shown more stability than other major cryptocurrencies. According to a study by the Blackrock Institute, Bitcoin is considered less volatile compared to the other two most popular virtual currencies -Ethereum and Ripple. Since Bitcoin is less volatile, it will increase its market dominance.
Also, the fact that a lot of issues affecting Bitcoin such as the SegWit and Lightning Network are being addressed is reason enough to prove that bitcoin will continue to dominate. The major threat to Bitcoin’s dominance is issues related to scalability. Bitcoin allows for a limited transaction per second which leads to congestion on the network as more people continue to transact over the network. As a result, some transactions take a long time to clear which doesn’t rhyme with the volatility of the cryptocurrency market. However, as these issues continue to be addressed, soon the transactions will take less time hence a stabilize Bitcoin.
Lastly, the movement of other altcoins in the market is influenced by the price movement of Bitcoin. When the price of Bitcoin shots, all other cryptocurrencies increase and vice versa. As a result of this trend, more investors will be interested in Bitcoin rendering it as a safer store of value thus increasing its dominance in the market.
Increase in Decentralized Exchanges
With the increase in popularity of the cryptocurrencies we’ll see an increase in decentralized exchanges in the near future. In 2017, we saw some countries such as China and Korea banned ICOs. SEC went ahead to declare that most of ICOs will be subject to the US Securities laws and failure to comply will result in legal action. As we move on, governments will be stricter on ICOs.
Many crypto analysts and experts speculate that the concept of decentralized exchanges is not yet ready for mass adoption, but it will happen sooner than later. In fact, there are a variety of decentralized apps being developed on some cryptocurrencies. For instance, dApps indicates that there are over 950 applications built for Ethereum alone. Majority of these applications are expected to begin operation this year. They can be used for different functions such as payment and lending, gambling, tokenization of assets, insurance, and many other uses.
Most virtual currencies have become more mainstream. As a result, people have started to realize the impact of the decentralized exchanges on the cryptocurrency market, and it is expected to increase even further.
Similarly, as more big players continue to get into the decentralized exchange field, there will be increased adoption of the concept. This trend will attract more players to the market. We can expect to see an increase in adoption of the decentralized exchanges in the future.