The cryptocurrency market has not seen the greatest profit this year, but this week has been an entirely different adventure. The last week has pulled down the crypto market’s value by $46 billion, going from $184 billion to $138 billion in the last 7 days. This comes with the biggest sell off that the 2018 crypto market has ever seen, bringing Bitcoin down by anywhere from 75% to 85% of their best prices.
Even with this decline, CoinShares executive Meltem Demirors believes that the rest of the market – ecosystem included – is still improving. In the last few months, it is clear that the industry has taken many hits, especially as initial coin offerings lost billions in the last few months, despite raising $30 billion in the last two years. Much of the losses have been in the billions, considering the lack of working products.
ICOs may soon be phasing out of the cryptocurrency market, considering how their relevance is fading. Even Binance CFO Wei Zhou has noted that the most important issue for the market is to continue bringing in high-quality projects and new founders, stimulating profit and capital.
Demirors commented, “On the issuer side, many crypto projects that raised money through an ICO face massive challenges to stay relevant and create real purpose. This is what happens when you lack a true finance function, and unfortunately, ‘crypto finance’ is still nebulous and undefined on the whole. Just look at this balance sheet below, which characterizes many crypto firms that raised cash through token offerings.”
As companies like Coinbase and Binance have seen, the industry and market has started to bring in new growth in their infrastructure and users involved in it. Binance recently reached 10 million users, which span across 180 countries. In an interview, Zhou noted that their company is striving towards 1 billion users eventually.
Even with the loss of value, Demirors noted that the ecosystem itself is still seeing expansion and adoption, which show that the market isn’t going away anytime soon. He added,
“So while value may be moving out of the assets themselves as the market digests new information and re-formulates its thesis on crypto assets, value is continuing to grow across the cohort of companies serving the crypto ecosystem. Just look at the people in this industry — thousands who continue to spend their time, energy, and capital on helping the crypto ecosystem grow. By writing, researching, advocating, building, developing, or simply holding.”
During the first quarter of the year, asset manager Blackrock took a hit as clients withdrew over $3.1 million worth of their fiat assets. This action is leading analysts to believe that the stock market is in much greater danger. Paul Hickey, a co-founder of the Bespoke Investment Group, said that many of the investors in the marketplace are trying to get out while they can.
The US stock market will inevitably impact economies around the world. However, it is also having a bad impact locally for cryptocurrency, as investors become nervous at the mention of high risk/return trading. Still, the cryptocurrency market is becoming accustomed to the healing and market corrections that come with the cycles, making them more prepared.
“Lastly, the funds and asset managers in the space, while under pressure, have historically done well given their longer time horizon and their ability to survive and weather market cycles. We expect this trend to continue, especially for some of the larger, better capitalized managers with deep experience who are able to manage finances and allocation strategies to capitalize on short-term price movements while keeping a long-term investment outlook.”
Zhao and Coinbase CTO Balaji Srinivasan both agree, at this point, that continuing to create in the crypto space will help the market to stay afloat during the bearish times.