This time last year The Armchair Trader was attending a Christmas party, and all people were talking about was Bitcoin and whether they ought to invest. Which Bitcoin trading platform was best, asked investors who were not even active stock traders. Since then we have seen Bitcoin rise to dizzying heights, and predictably crash a burn. The issue of whether cryptocurrencies are going to become the established asset class many of their ambassadors claim they will be has been kicked around by traders and the media all year long.
Here we offer a quick summary of what 2018 really looked like in cryptocurrencies – were you part of the roller coaster ride?
The bull market of the holiday season came screaming to a halt as we entered 2018 and Bitcoin lost 40% of its value over January. This decline was due in part to new regulations in South Korea, as well as Facebook announcing they were starting to ban the advertising of cryptocurrencies and crypto exchanges.
By February, nearly half of 2017’s ICOs had failed to attract funding. Fortune reported that 142 ICOs failed before reaching their target, while another 276 failed after their fundraising ended. While some of these were actual token sales to raise money for would-be start-ups, a good number of these ICOs turned out to be scams, with the founders disappearing with the money raised.
“It’s always important to make sure you thoroughly research a company, its employees, and founders before deciding to buy their tokens,” says Magdalena Golebiewska, country manager at Luno.
March brought with it better news for Bitcoin trading platforms and other cryptocurrency trading venues. The G20’s Financial Stability Board comprising of 68 institutions such as banks and ministries of finance, who then prepare suggestions for global financial systems, stated they didn’t believe crypto-assets posed a threat to global markets. The FSB Chairman, Mark Carney, wrote a letter to the G20 Finance Ministers and central bank governors, in which he expressed his concerns about the possible issues that could arise for consumers and investor protection. He noted, however, that the underlying cryptographic and blockchain technology had the potential to improve the inclusiveness of the financial system and the economy. The board delivered varying results for the world of crypto, but overall the sentiment was positive.
As the effects of the start of the year began to fade, the CEO of NASDAQ, Adena Friedman, provided a possible reason to look forward to the future of the crypto industry.
“Certainly, Nasdaq would consider becoming a crypto exchange over time. If we do look at it and say, ‘It’s time, people are ready for a more regulated market’, for something that provides a fair experience for investors.”
While many banks are hesitant about cryptocurrency, and what it could mean for them, Goldman Sachs had other ideas. The company announced their move to have the first Bitcoin trading platform on Wall Street. In a twist, however, it was reported that the firm was putting a halt on the operation. It seems as if fake news doesn’t discriminate, even with covfefe-crypto. When Goldman CFO, Marty Chavez, heard of the report, he stated, “I never thought I’d hear myself actually use this term, but I’d really have to describe that as fake news.”
Past the 2018 halfway mark, and Facebook lifted the ban on crypto advertising for select companies. The ban was initially put in place to try and prevent Facebook users from falling for misleading advertisements for ICOs and binary options. To advertise, crypto-related companies needed to pass an eligibility test. Once Facebook was able to assess potential advertisers more closely, there was less harm in allowing companies to place adverts on the platform.
Following Facebook re-opening the door for crypto advertisers, Google decided to move in the opposite direction by banning crypto adverts. Their March announcement came into effect with similar reasoning to Facebook.
The SEC denied over nine more Bitcoin ETFs (exchange-traded funds), including the Winklevoss’ Gemini. The agency claimed the Bitcoin market is too loosely structured and lacks protections against fraud and manipulation to merit an exchange-traded fund or product.
Google partially lifted its halt on cryptocurrency advertising. Since the announcement of the original ban, the company had said in a press release that, “Advertisers will need to be certified with Google for the specific country in which their ads will serve”. They continued by saying advertisers would be able to apply for certification once the policy was inaugurated from October 2018.
Ten years have passed since the anonymous programmer (or programmers) known as Satoshi Nakamoto first published Bitcoin: A Peer-to-Peer Electronic Cash System. The paper served as the first published document to outline what is considered as the world’s first scarce currency.
A Bitcoin Cash hard fork hit the crypto market on 15 November. Since its inception, the Bitcoin Cash blockchain has been undergoing scheduled hard forks every six months to upgrade and improve the protocol.
The G20, the international forum for governments and central bank governors, decided on regulating the crypto sector. The declaration detailed that member countries would regulate crypto-assets for anti-money laundering as well as to counter the financing of terrorism. The use of crypto-assets for money laundering had been an issue of growing importance for law enforcement agencies over the course of the year.
“It’s been an eventful year in the crypto space,” says Golebiewska. “From dramatic price changes, forks and shifting market trends. In 2018, cryptocurrency markets continued to show growth in regions across the globe, showcasing the world’s desire to exercise more control over their finances.”
And what about 2019? The G20 decision to start to regulate crypto assets is going to be a significant one. This move was inevitable and will likely see many of the more marginal currencies simply crushed by regulatory burdens. But at the same time, the more respectable cryptos could find themselves attracting more activity in the institutional market, thereby boosting their values and their validity.