Fred Wilson, a NYC-based venture capitalist and Managing Partner at Union Square Ventures, thinks 2019 will be an eventful year - and not just for the cryptoasset industry. Citing a bevy of important geopolitical and economic factors, he predicts general volatility in the world, an end to the crypto bear market, and the fulfilment of some of 2017’s crypto promises.
Wilson counts four main subjects when considering the upcoming year: The effects of a potential premature end to the Trump presidency; a looming correction in traditional markets; turmoil in Europe as Great Britain sets up to leave the European Union (EU); and slowing economic growth in China. The fortunes of the cryptoasset industry stand in the context of these global trends.
A Series of Global Headwinds
US President Donald Trump will be impeached, he predicts, pursuant to the conclusion of Robert Mueller’s investigation into Trump’s allegedly illegal exploits. Wilson predicts that such an event, should it occur, would “have serious impacts to the economy in the [US] starting with [its] capital markets.”
Global markets are already weak, with the FT commenting that “Growth could be set to slow simultaneously in the US, China, Europe and Japan next year compared with this year.” Wilson expects the S&P 500 stock index, one of the global economy’s most salient benchmarks, to continue its decline and signal a year of contraction in traditional markets. The S&P has already fallen up to 20% in past weeks, and Wilson expects a further 20% from current levels (over 30% overall from all time highs).
(S&P 500 Index; source: TradingView.com)
What’s more, the cost of borrowing money in the EU (and possibly the UK) is set to rise and has already risen in the US during 2018, as monetary authorities in both regions seek to scale back quantitative easing (a move criticized by many).
Wilson also points to the ongoing “trade war” with China, which has already threatened to overflow into the cryptoasset industry by threatening the overseas sale of Chinese-produced cryptocurrency miners.
He reckons that “It seems inevitable that China will make some concessions to the US to resolve these trade tensions.” Wilson adds that “Any significant trade concessions from China could impact its growth prospects in 2019 and beyond, which will take the most powerful engine of global growth off the table this year.”
All in all, most traditional markets don’t look good, except perhaps commodities like palladium, and the so-called information economy. On the latter point, Wilson says “The startup/tech economy is somewhat immune to macro trends,” and that the sector will grow in 2019 in spite of the macro picture.
What Does This All Mean for Crypto?
The cryptoasset industry perhaps hews closest to the information economy, and Wilson does not seem to correlate our market much with the general macro background. He sees 2019 as a reversal year, but does not claim that a bottom has been necessarily found in the markets - adding that finding a bottom “could take much of 2019 to play out.”
The next bull market will be spurred by “promises made in 2017 coming to fruition in 2019,” and Wilson’s top picks for 2019 are “stablecoins, NFT/cryptoassets/cryptogaming, and earn/spending opportunities, particularly in the developing world.” He’s concerned about overzealous regulators. But overall, Wilson is “incredibly optimistic,” adding that “It is going to be a doozy.”