Crypto Performance in 2019: The Highs and Lows

As we enter the new decade, BTCManager takes a summary look at the performance of the crypto market in 2019.

Bitcoin the King of Price and Network Performance

Bitcoin (BTC), the top-ranked cryptocurrency based on market capitalization experienced a much better year-to-date (YTD) price performance in 2019 than in 2018. In the absence of any significant movement in price action, BTC will end the year up by more than 95 percent, a massive change from the 72 percent decline seen in 2018.

On the technical side, Bitcoin’s network also saw massive growth in hash rate and mining difficulty. As previously reported by BTCManager, the Bitcoin hash rate surged by 61 percent in September 2019 alone.

Barring any hash rate death spiral in the next few hours, Bitcoin will end the year expending a computing potential of more than 100 quintillion hashes every second — more than 44 quintillion hashes per second that characterized the start of 2019.

In terms of adoption, Bitcoin saw increased activity among institutional players as BTC futures trading experienced a surge in 2019. Both CME and Bakkt reported record trading volumes with both exchanges moving forward with introducing Bitcoin options in 2020.

Risk-Adjusted Returns Paint Different Investment Performance Picture

In a market report published on Monday (December 30, 2019), Santiment, a crypto analytics startup, argued that the percentage YTD price gain does not provide a holistic commentary on crypto performance. Using the Sharpe and Shortino ratios, Santiment evaluated risk-adjusted returns for the crypto market.

Discarding raw returns data and focusing on risk-reward considerations, tokens like Seele (SEELE), Synthetix Network (SNX), and Chainlink (LINK) are the best performing tokens. Apart from LINK, most of the other altcoins aren’t in the top-20 rankings by market capitalization.

Altcoins like Chainlink, Tezos (XTZ), and Binance Coin (BNB) did, however, manage to see massive returns both in terms of spot price and risk-adjustment performances. Such was XTZ’s 2019 performance that BTCManager predicted that it could shoot into top-10 rankings before the end of 2019.

As at press time, XTZ is in the 10th spot, with a market capitalization of $35 million more than 11th-placed Stellar (XLM). LINK and BNB gained 507 percent and 125 percent YTD.

ICO Decline Deepens Amid Tightening Regulations.

While Bitcoin’s performance counts as a high and altcoins present a mixed bag in terms of YTD spot price gains, the ICO market counts as a massive low for cryptos in 2019. The decline seen in ICO earning figures in the latter part of 2018 only became steeper in 2019 with some commentators positing that the market is all but dead.

Regulators like the U.S. Securities and Exchange Commission (SEC) also increased their scrutiny on the market with numerous indictments and fines. ICOs weren’t the only market segment to face stricter regulations as governments across the world took a more hands-on approach to crypto oversight.

Going into 2020, one of the challenges for crypto remains retail adoption — utilizing these tokens for everyday microtransactions. Apart from issues relating to scalability and transaction speed, the tax implication of such crypto utilization also poses another concern.

In the U.S., some lawmakers are trying to get a ‘de minimis’ exemption for crypto purchases below a certain limit. Critics argue that such a policy might create a cryptocurrency tax evasion problem.

Commentators already have a litany of expectations for 2020, with significant events like the Bitcoin halving, Ethereum hard fork, and the expansion of Bitcoin options trading to mention a few. Central banks in different countries are also looking towards launching their own digital currencies to prevent the spread of private cryptocurrencies.