Economic slowdown in 2019 and beyond will see cryptocurrencies bounce back following a difficult year, according to one tech expert.

The cryptocurrency market has seen heavy declines throughout 2018. Bitcoin prices peaked above $19,000 in December 2017, but now sit below $4,000 after November wiped more than 20% off of its value.

However, according to Ian McLeod, co-founder of art-tech agency Thomas Crown Art, cryptocurrencies will become a safe haven over the next 12 months as political uncertainties and increasing trade tensions slow the global economy.

“There’s a growing list of investment tailwinds to consider for 2019. These include significant trade tensions, rising interest rates, political uncertainties, including Brexit, and complacent financial markets,” McLeod said.

“The US, the world’s largest economy, has, of course, considerable influence on Asian and European economies. As such, should the US stock market plunge – as it did recently scrapping all of its 2018 gains during a major sell-off – global markets are vulnerable too.

“When the downside of the economy hits, digital assets, cryptocurrencies like Bitcoin and Ethereum, are likely to be viewed by investors as a robust means of storing wealth, in the same way they do with gold.”

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Cryptocurrency 2019: The new gold?

After the meteoric rise of cryptocurrencies in the second half of 2017, many predicted that 2018 would be the year that currencies like Bitcoin gained mainstream adoption. While some businesses and governments did buy in to the Bitcoin craze, the technology was ultimately held back by high transaction fees, slow processing times and volatile prices.

While for many the craze has come and gone, McLeod still has hope that cryptocurrency will gain mainstream adoption as businesses begin to recognise the technology’s full potential.

Use of cryptocurrencies will, he said, “dramatically gain momentum in 2019 as the world, especially businesses, realise ever-more uses for and value of crypto and blockchain”.

Particularly with events like Brexit approaching, and the United States and China still at odds over trade, cryptocurrency could become in-demand once again. This increased demand would likely push cryptocurrency prices up as the value of fiat currencies plunge.

“There are several key reasons why the likes of Bitcoin and Ethereum will be safe havens,” McLeod said. “These include scarcity, because there’s a limited supply; permanence, they don’t face any decay or deterioration that erode their value; and future demand certainty as mass adoption of cryptocurrencies and blockchain, the technology that underpins them, takes hold globally.

“We are some way off from cryptocurrencies replacing the Swiss Franc, the Japanese Yen or gold as the preferred safe haven assets.

“However, as the world moves from fiat money to digital, and as adoption of crypto picks up, there can be no doubt that cryptocurrencies will be firmly in the pantheon of safe haven assets within the next decade.”