FinancialGuy Writes!

In the dim and distant past of October 2019 – how much has happened since then???? – I made a prediction of growth for the crypto space for 2020 and 2021. Now seems like a good time to update it as we are about half way through.

Since this is a policy blog, a few highlights… US law enforcement has really started to take an interest in crypto this year. There are now very important cases underway against Tether / Bitfinex and Ripple / XRP. Either has the potential to really upend the space and dramatically impact prices. However, if it turns out that either organisation has been doing what they are alleged to have been doing, then this needs to happen. There aren’t enough protections for investors in crypto as it is, so baring some teeth against people that have been taking advantage of others is no bad thing.

In my previous post in October 2019 I predicted strong price movements for several assets. Those have certainly happened. However, along with everything else in the world in 2020, the crypto market has been incredibly volatile and subject to panic selling and buying. The prices I am discussing today have certainly not gone up in a straight line!

I previously mentioned six assets, plus one. The plus one is Bitcoin, which has had a great 2020 (in terms of price, but no longer seems to have any innovation or product development underway). I still believe that the BTC price will rise strongly in 2021, but I don’t personally hold any, as my fears for chain congestion, an out of control mempool and rising fees have not changed. If BTC has a great 2021, these fears are likely to be realised.

Of the other six, let’s take a look at their prices from 27th October 2019 and compare them to now:

Bitcoin Cash: then 239.45 euros, today 275.44 euros, change +15%

Ethereum: then 169.75 euros, today 528.53 euros, change +212%

Monero: then 54.89 euros, today 132.19 euros, change +141%

Zcash: then 34.54 euros, today 53.87 euros, change +56%

Tezos: then 0.77 euros, today 1.57 euros, change +104%

Cardano: then 0.04 euros, today 0.13 euros, change +225%

Those are an interesting set of numbers! At the time of writing I was most bullish about Bitcoin Cash which just shows 1) what I know… and 2) the importance of diversification. I have just taken my own YTD 2020 marks and my own crypto portfolio is +334%, which also shows the impact of timing, date selection and dollar cost averaging!

I am still positive about the future of each of these assets to a greater or lesser degree. My hopes for Ethereum are still incredibly high. The beginnings of Ethereum 2.0 and the switch to proof of stake have been very positive. There really is a chance that Ethereum will become one of the dominant business solutions for the world. The range and capacity of services being built on top of it is just mind-boggling.

If my fears for Bitcoin come to pass, then Bitcoin Cash is almost certainly the best alternative to it. I feel as though Bitcoin is now a peer to peer value exchange system for the very wealthy and governments. I don’t really believe in the store of value arguments being made, unless it is easy to transfer that value somehow. For now, it kinda is, but may buckle under the pressure of the masses. In contrast, Bitcoin Cash is the peer to peer value exchange system for the masses – the thing you really can buy a cup of coffee with. For example, I sent US$100 to a friend earlier this week and the total transaction fee was UNDER US$0.01. Yes, less than 1 US cent to send money internationally. If I had sent $10,000 or $100,000 the cost would have been the same. That is the promise of crypto being delivered!

Monero and ZCash are both privacy coins. This means that it is much more difficult to analyse the chains and determine what value has been passed from where to where. At this stage, it seems that the world is unsure whether it needs this – and to be honest, the projects are less mature and have smaller ecosystems than Ethereum or Bitcoin Cash – but my guess is that the world will want and need this, so I will continue to hold mine. Monero also happens to have some incredibly favourable tokenomics, which makes me very confident of continuing price rises.

Perhaps the one asset on the list that I am now cautious about is Tezos. I have been impressed by the technical progress they have announced and delivered. However, I was worried some time ago that there might be an Ethereum killer and if there was, Tezos was a leading candidate. It has progressed well, but as Ethereum marches onwards, it looks less and less likely that there will be an Ethereum killer and, if anything, this casts some doubts in my mind about whether it’s competitors will be able to survive. For now, I will continue to hold and watch.

Back in October 2019 the entire world of decentralized finance (DeFi) only barely existed, which just shows how fast the crypto space is moving now. There are estimates that there is now more that US$15b locked up in DeFi smart contracts! The DeFi boom of this summer was something to behold, along with the usual range of scams and insane gambling. In fact, the crypto world adopted the word “degens” for DeFi speculators. It is short for “degenerates” given the extreme level of gambling that was going on in new and untested projects. If you have an itch to learn just how crazy things were, I suggest that you do a little googling about “yam defi” and “chef nomi” and “sushiswap”. It is genuinely incredible.

DeFi is almost certainly going to continue to grow, hopefully in a more sensible way. The emergence of decentralised exchanges (dex) has the potential to change everything and non-fungible tokens (NFTs) brings the promise of trading digital tokens in almost everything much closer. This really is a brave new world and the transfer of wealth into crypto over the coming years will be breathtaking. Don’t look away!

Full Disclosure
FinancialGuy is a regular buyer of crypto and has small holdings in each of Bitcoin Cash, Ethereum, Monero, Zcash, Tezos, Cardano and Basic Attention Token.

Caveat Emptor
Once again, it goes without saying that this is for information and entertainment purposes only. Asset prices rise and fall and you should not hold responsible or sue an anonymous blogger if his tips do not work out. Please do your own reading and research (lots of it!) before making any significant financial decisions.

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