After a year-long price “bloodbath” that has seen many once-popular tokens lose as much as 90% of their trading value, the tide appears to be changing for alt-coins. The price of Ether (ETH), for example, has grown by more than 125% since late August, while tokens like Ripple Lab’s XRP have seen single-day price gains of 9% in just the last few days. At the same time, bitcoin’s price has been relatively flat, suggesting that big changes may be happening in the alt-coin world.
According to some cryptocurrency analysts and pundits, a major breakout for undervalued crypto tokens may be just around the corner. In this post, we’re taking a look at the alt-coin bulls’ argument that 2020 will be a major year for non-bitcoin cryptocurrencies.
1. Increased chance of global recession in 2020: It’s easy to forget that cryptocurrencies were specifically designed as a response to the “create money out of nothing” monetary policies of central banks. With many economists now projecting a global recession next year, cryptocurrencies could become a safe haven for inflation-wary investors. While bitcoin is the most likely beneficiary of this scenario, most major alt-coins would also likely see a substantial price increase.
2. Bitcoin has serious limitations in scalability: With an average block validation time of 10 minutes, and a current block size limit of just 4MB, bitcoin simply isn’t suitable as a high-volume payment platform. That’s a problem for anyone hoping to use the bitcoin blockchain as the backbone of an instant-settlement system. Many alt-coins don’t share bitcoin’s speed and data limitations, and this could encourage investment in non-bitcoin blockchains.
3. Tokenized securities, utility tokens, and specialized blockchains: As major tech firms, banks, and international corporations continue to adopt blockchain solutions for everything from improving logistics to selling stocks, the value of those projects’ associated cryptocurrency platforms could also increase in value. The Ethereum blockchain, for instance, is currently used for dozens of “utility” focused ERC-20 tokens that have limited value as standalone cryptocurrencies. This adds value to the Ethereum blockchain, indirectly increasing the price of ETH. Similar arguments can be made for Ripple, Stellar, IOTA, and other utility-focused blockchains.
4. A 2020 bitcoin boom could increase cryptocurrency prices: As the old investment maxim states, “A rising tide lifts all boats.” Bitcoin’s price is likely to rise substantially in 2020 due to it’s “halving” event in mid-May, reducing the block reward and the supply of new BTC. When bitcoin’s price goes up, other tokens tend to gain value as well. BTC’s meteoric rise to $20,000 in late 2017, for instance, also saw all-time highs for LTC, ETH, and many other alt-coins.
5. Increased ICO regulation could mean more alt-coin investment: In the last few years, the U.S. Securities and Exchange Commission (SEC) has cracked down on initial coin offerings (ICOs), making it increasingly difficult to launch new cryptocurrencies. Instead of investing in new tokens, crypto-focused speculators may instead begin investing in existing coins that appear to be undervalued, increasing their price.