In the digital asset industry, Galaxy Digital is popular as a diversified, multi-service merchant bank with extensive experience spanning investing, portfolio management, capital markets, operations and asset management. The firm recently released a 2019 holdings review and in this article, we’ll discuss the top trends and highlights from the report.
2019 was a year of unprecedented action, volatility and sentiment-driven price movement that gave us a break from crypto winter and ushered in a bull run for Bitcoin, in June 2019. The aggressive sell-off of 2018 had left investors waiting to recover losses and close trading positions, 2019 provided ample opportunities for the same.
The rally that started in June, carried well into the first two weeks of 2020. Coupled with the geopolitical crises and positive sentiment, Bitcoin and the entire class of cryptocurrencies gained value and traction, all year long. After the comeback of Bitcoin price action in 2019, investors concluded that despite market ups and downs there is a net profit in HODLing Bitcoin and top cryptocurrencies based on market capitalization.
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Back in 2009, Bitcoin had emerged in response to a financial crisis and in less than a decade, it has established itself as a consistently outperforming asset. Satoshi had invented Bitcoin to return power to where it was originally meant to reside, with people, by creating a peer to peer digital cash transfer system. It earned the title of digital gold and got legalized in several countries. The crypto market amounts to roughly $200 billion. Bitcoin has made a massive impact on the society and continues to do so as we examine its effects on several industries.
Several institutions had filed for Bitcoin ETFs and consecutively filings were rejected or withdrawn. In 2018, Bakkt, the Intercontinental Exchange (ICE) and Fidelity launched their institutional custody solutions for bitcoin. Several exchanges and wallets launched escrow services and launched wallets that support multiple cryptocurrencies. Institutional investors started warming up to Bitcoin due to increased adoption and government nod.
There is an improvement in the regulatory scenario, as Libra’s launch announcement started a dialogue in Congress.
In its review, Galaxy Digital has discussed the historic RoI of Bitcoin, its rally to $20,000 in December 2017 and its rally to $12,000 in August 2019. In 2019, Bitcoin has given returns of up to 95 percent.
Lightning Network’s launch has added to the value of Bitcoin and generated an overall positive sentiment.
Apart from Bitcoin, Litecoin, BCH and Ripple, ranking top 10 based on market capitalization, have given above 30% returns in 2019. The top 10 cryptocurrencies are working towards increasing adoption and scalability in the crypto industry. In the traditional fiat industry, there are few avenues for growth. However, in cryptocurrencies it is highly likely to have multiple winners and there is space to accommodate and include central bank digital currencies and stablecoins.
While crypto is still in its nascent stages, adoption is being driven by millennials and the tech industry. Money may be a zero sum game, tech adds on. Investors have gained 10x, 50x and 100x by staying invested in the right crypto asset, during volatile times.
Ethereum and its competitors have managed to raise investments and give consistently high returns owing to their product innovation and frequent updates. Key players like Ripple, are making a mark with global partnerships and investing in companies like Moneygram. This has given a boost to the altcoin market in 2019.
In 2019, DeFi and other Ethereum-based alternatives for financial services are gaining popularity. It was also a year for market makers and liquidity providers. Several fiat backed stablecoins entered the market, hoping to bridge the gap created by crypto winter and investor losses.
According to the report, the total value locked in ‘DeFi’ contracts grew 115% from $317 million to $680 million in 2019 and users grew over 500 percent. The report provided an insight into the state of cryptocurrency in 2019 and highlighted the most significant trends to help investors predict price action for 2020.
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