Before we go into predictions for 2019 here is a recap of predictions I’ve made in the past:
Bitcoin to Supermoon (at price $750)
Crypto markets are broken (Dec 2017)
Pondering the BTC top (on THE day it topped)
I also posted a lot of charts and forecasts that did not happen (*cough* $50 EOS *cough*) but overall, not too bad IMHO. I wish I traded as well as I forecasted, but such is life.
Now, onwards for 2019.
The SP500 will continue falling. This volatility is not a sign of a strong market experiencing a dip, it’s the algos rushing for the exits as orderly as possible. I expect a 50% retrace from the top after Q1 2019. Caveat is Trump goes full maniac mode, bypasses the Fed, and orders emergency measures to prop up the market. This will be uncharted territory and may cause extreme volatility but the market will still correct.
Real Estate will correct. This is a general statement as local markets vary but if you live in a city start to take notice of the number of For Sale signs around your neighborhood. Are they increasing? Open Zillow and notice how many properties show recent price declines. That’s the early warning sign of a correction. During the 2009 crisis banks bought distressed real estate with free government money and held that real estate off market. This caused a building boom and prices increased due to reduced supply. Now inventory has caught up, free money has tightened … yet prices remain hopelessly out of reach for millenials. Rents in Southern California have doubled in a few years. $3,000/month rent for 800SF condos is not uncommon. $600+ per SF sales prices in urban walkable neighborhoods are normal. These are not typos.
Generally speaking, most prospective homeowners can afford to finance a property that costs between 2 and 2.5 times their gross income. Under this formula, a person earning $100,000 per year can afford a mortgage of $200,000 to $250,000.
Yet many 700SF condos in Southern California are selling for $400k+. Are those 700SF condo owners making $200k/year? I think not. We are back in a bubble in San Diego and many other areas.
Another example of the financial fantasy we live in today is $12 avocado toast. Two pieces of bread with an avocado for $12 on credit cards with 24% interest rates and a $500 BMW payment on a $50k salary is par for the course for many under 30. We learned nothing from the 2009 crisis. This cannot end well but let’s hope it ends soon. But in the meantime, #YOLO.
Urban San Francisco is a dystopian nightmare yet has the highest real estate prices in the Country. This will end. LA, NY, Orange County, New York and parts of Chicago will all go through the natural downswing after a decade long boom. This starts in 2019 and gains steam for several years. Great deals will be available in 2022 and beyond.
Trump will finish his first term and will not run for a second term. The Mueller investigation is a bust.
Let’s be straight here, winning the election was the worst thing that ever happened to Trump. Trump doesn’t enjoy being President. Look at his life pre politics: being a billionaire with near zero accountability and semi celebrity status with freedom to grope beauty contestants to now being under the microscope trapped in the White House with nothing but Fox News and Twitter. Trump wouldn’t admit that winning was bad for him but it definitely is a sour situation for himself and his family. The fact Trump won shows the sorry state of American politics.
So who could win a Presidential election? I would bet on a popular non politician. I know nothing about Dwayne The Rock Johnson’s political ideals, US citizen status or experience but his likability, outsider status and lack of scandal may have made him a formidable candidate. It worked for Ronald Reagan. Will he make a run? If not, could we have President Kanye West? At this point in the post Trump era anything is possible.
I believe career politicians have an uphill battle for President. The system is broken. It’s us vs them.
The founding fathers expected political offices to be held by esteemed members of the community. Their ideal of government was a combination of experts from various backgrounds doing the will of the people for a limited time before rejoining society. This system worked well for a long time but unfortunately it is no longer the system we have today. US government is now crony capitalism where power is brokered daily and an entrenched incumbent can trade political favor for self enrichment. The US system needs a shakeup. It will either be a decade long movement or a violent upheaval. Timeframe unknown.
Holding hunks of shiny metal may be a sane choice in an insane world. I’ve held precious metals in the past as a hedge but they are really for the extreme worst case scenarios. The goldbugs are a unique group. I can sympathize but I can’t say I’m one of them. The only people more out there than goldbugs are the crypto crowd which I will get to next.
Gold may break the recent highs of mid 1300’s but I don’t think a new all time high will happen in next 5 years. Gold is a fax machine in an email world. The characteristics of gold overlap with the characteristics of crypto except crypto is also easily divisible and easy to send anywhere for free. Advantage: crypto.
I sold my precious metals a few years ago for crypto. If I still held metals I’d do the same today. If you can afford a couple sleeves of gold eagles of even a few bars of shiny gold in a safe, knock yourself out. You’ll be hedged against disaster. However, if we resort to exchanging hunks of metal for goods and services we’ll have bigger problems to address than choosing the best performing asset class.
Here’s a video of Peter Schiff vs Erik Voorhees debating Bitcoin vs Gold.
It seems every week, month, year is a critical time for Crypto. Any technology or revolutionary movement is most vulnerable in its formative stages. Bitcoin just hit it’s 10 year anniversary this month. Bitcoin is still a infant as an asset class.
Crypto is at a make or break point. After an extreme hype cycle and gross misallocation of resources and funds Crypto is facing a do or die scenario in 2019.
Here’s my viewpoint and why I think every other forecast for Crypto I’ve read so far is complete junk.
Most forecasts will focus on BTC, ETH, EOS, XRP and maybe they will mention LTC, XLM or XMR. Insert other random coins as needed. Most of them will not address Bitcoin SV (BSV).
You can throw all of those forecasts in the garbage. They are worthless. None of those projects are addressing scalability in a realistic fashion. In fact, many of those projects are now openly discussing Proof of Stake or centralization as a solution. This is ironic given Bitcoin, the foundation of all things crypto, was designed to be decentralized peer to peer and based on Proof of Work.
The coin to watch is BSV. The BSV roadmap is the only coin that includes decentralization, proof of work and scalability. BSV has many challenges to overcome and I’m more skeptical now than I’ve been in the past but it’s still the only game in town. The goal is that BSV is adopted as a currency / commodity ledger by commercial and or government by 2020. That’s what matters in Crypto. Scalability and adoption. Everything else, and I mean EVERYTHING ELSE, is a sideshow.
Those are my predictions for 2019. Let’s see how they play out.