Combined cap of cryptocurrencies read a record high of approximately US$830 million on January 7th of this year. Over the next month, we saw a huge 65% drop in its total market capitalization. The media claimed that Bitcoin was in its grave, and then the Twitter stream went client, and many hopeful investors lost all their savings by selling near the bottom.
Assuming you didn’t short yourself when the price dropped, then you should pat yourself on the back, as you probably survived the 7th time that the crypto market was deemed extinct.
It’s easy enough to get caught in the miasma of headlines and to check how your portfolio is running every 10 minutes. Is this the right thing to do, or will it affect the market? Well, no.
The question that remains and what we should ask ourselves is this: “have the markets shifted?”
If you think that the fundamentals of the market have got worse over time, then it’s important to make tweaks to your investment profile.
However, if you think that the fundamentals have improved, then you should enjoy the healthy discounts as all of your digital assets can now be sold for a cheaper price!
From a lot of trader’s perspectives, the fundamentals of the market have not improved:
- The US government is underpinning innovation and shorting illegal activities
- Russia will launch its own cryptocurrency, the Cryptoruble in 2019
- Despite confusion in the market, China, India and South Korea do not have plans to ban cryptocurrencies
- Blockchain jobs are the second fastest growing market and now offer premiums on salary
- Bitcoin’s Lightning Network is gaining acceptance
So, although the future is certainly positive, it’s clear that we are in a bit of a slump right now. However, this is not a terrible thing. As this gives us the opportunity to look back from the charts and invest into some cryptocurrency education.
Data is cheap but clearing through all the noise can be a costly mistake. Avoid making short-term price predictions, or the next ICO or the mainstream media. Instead, look deeper.
Learn from the leaders of industry, delve into new projects, and see understand the tech, network with others in your industry circle, study up on books about decentralization, distributed systems and how the outlook of money is set to change for the future.
You will look back on this decision and smile.
During these downward trends, investors can find hidden gleems of gold and engineers construct devices that will be more valuable in future. This is a gift and we encourage you to enjoy the time you have now as it won’t last forever.
Top 2018 Cryptocurrency Trends
Today, we’re stepping out of a dark cave of crypto research and crypto charts to present you some findings of our labours. In this article, we’ll share the top 7 crypto trends of 2018, and how to make use of these insights to leverage your investment strategies.
#1. Platforms Are Still Everything
Putting your money into a platform is perhaps one of the safest and easiest ways of making money from digital assets. In 2017, we saw the price of Ethereum rise from $8 in January to a peak of $1,400 in December, which is a value increase of 175x in a single year.
This value increase was due to a rise of 70% of ICOs launched on the Ethereum platform in 2017. This craze of ICOs will likely continue to surge in 2018, which will further the value of all platforms that launch ICOs.
Investing in platforms is the safest and potentially most lucrative sector of digital assets in 2018.
Although decentralized applications raise huge amounts of money via the ICO process, it’s still not too early for consumers decentralized apps to reach mainstream adoption. Not to mention the fact that over time, most decentralized applications will be sucked up from the platform itself.
Another thing to keep in mind is that decentralized applications have a long way to go before they can reach the levels of adoption to make the market.
When thinking about putting money into an investment, timing is generally more important than the team, the technology, or anything else that you might use to judge the value of an investment.
Think of what would happen if you tried to launch Facebook back in 1995 – it would have been a spectacular failure. The internet was not yet fast or broad enough, and the network effect was negligible.
While there are numerous other consumer-focused decentralized applications that promise the world and more, the landscape for change must be ripe for adoption in order for them to succeed. It’s still a tough road for beginners to enter the crypto market, and the smart contracts today are typically only used for token sales. So, we’re just not ready for adoption on a wider scale.
Even if all decentralized applications fail, the infrastructure behind them will hold their value.
But does this mean that we should avoid every decentralized application? Nope. Most people feel that decentralized apps will end up failing, but the marketing and hype behind them will eventually let them succeed over the long-term.
This then brings us back to the issue of platforms. Platforms that provide infrastructure for other teams to make applications on and hopefully make a nice profit at the end. As projects continue to be built on top of platforms like Ethereum, the majority of its value will be held by the platform itself, and not on the application level.
Decentralized applications will always come and go, but the technology that they are built upon is here to stay.
Here’s an opinion for you to consider.
Platforms and infrastructure projects have a balance of both risk and reward. Initial coin offerings will surge demand as they as exposed to timing issue that most decentralized applications face. Not the mention that institutional money is found on platforms in 2018.
Some of the most popular platforms for 2018 are: ETH, NEO, EOS, and ICX.
#2. The Popularity Of ICOs Will Continue, But The Platforms Will Change
The ICO craze took the crypto world by storm in 2017, delivering at least 3.5x more capital to blockchain startups than VC since 2017. Rightfully so, the ICO model can be seen as an improvement from the venture capital model. Both the investors and the founders win.
In this case, investors witness an increase of liquidity. When venture capitalists put a large amount of money in early stage businesses, their capital is generally locked up for 5-10 years with the hope of an extremely large payday. The benefit of token sales allows people to get instantaneous liquidity that allows them to move in and out of projects when they feel like it.
Founders get money and extra freedom to create the projects that they love. In general, startups were once forced to participate in Silicon Valley to get the needed investment from Venture Capitalists.
Today, token sales help to raise funds worldwide, which allow even everyday people to get into the action. Instead of founders surrendering ownership and answering questions of VCs, they get total ownership and are able to have smaller contributions from a large pool of investors.
While the craze of ICOs will likely to continue, there are really 3 predicts on the ICO market for 2018.
#3. Pre-ICOs Will Fund More Money Than The ICOs Themselves
If an ICO doesn’t sell out, the price tanks as soon as the tokens are tradeable. In order to minimize this risk, more projects are electing to sell a large percentage of their tokens for a discount during a “presale” period. These “pre-ICO” funds will mainly come from private investors and syndicate groups.
The leaders of these syndicates group their funds together and then set a discount price during the pre-sale period. The projects in these groups benefit through a cheaper fundraising process and their ICOs appear to be in higher demand as they are 50% sold out on day 1 of the ICO. Yet this is just another trick as most of the tokens were sold during the ICO at a huge discount.
Syndicate leaders can help the average person invest in ICOs at a discount, but it requires a huge amount of trust as they act as a custodian of your money.
#4. ICOs Will Face A Regulatory Pushback
In 2017, China and Korea put a ban on ICOs, and the SEC declared that the majority of ICOs will be subject to US Securities laws with the failure to comply resulting in legal action. As time goes on, governments will take an increasingly intolerant stance towards ICOs in future.
As regulations increase, we’ll start to see an increase of arbitrage as ICOs will make use of countries that have more relaxed regulations, like Switzerland.
This pushback from governments and regulators could lead to a slowdown of the craze of ICOs but could lead to a stronger foundation of the market.
#5. Ethereum Will Launch The Most Amount Of ICOs But Will Have A Lower Market Cap
During 2017, almost 70% of all ICOs started on the Ethereum network. However, it’s known that Ethereum has scaling issues, and due to the weakness of the network, more projects could choose to launch their own ICOs on alternative platforms.
For this reason, investors will need to be more careful about where they choose to invest their money, especially with presales and ICOs in 2018. Most ICOs will fail, and if you are not in the pre-ICO stage, then you have probably lost your chance already.
If half of the tokens during the presale were valued at 1$, and the price of the ICO is $3, then who will win when the coins make their way to the exchange. While you could think that you will make a profit at the ICO price, those who purchased early have a much better risk and reward profile.
Look at the discount of the presale before putting any money in. Go through the telegram and networking groups to see who is buying into it. If you are thinking about joining a syndicate group, ensure that you can trust the organisers with your money.
Additionally, as regulators take an increasingly intolerant stance towards tokens, make sure that governments can’t interfere with your ICO process. The SEC has already interfered with over 80 projects who launched token sales, and this is just the start of the regulatory backlash.
And last, keep aware of ICOs that launch on other platforms, especially NEO that has a great list of ICOs that will be starting in 2018. Lastly, keep an eye out for ICOs on platforms other than Ethereum, especially NEO which has an impressive list of ICOs slated for 2018.
#6. The Scalability Debate Of Bitcoin’s Lightning Network Will Increase
As the controversy around cryptocurrencies reached its peak back in December, the debate about its scalability limitations for both Ethereum and Bitcoin were exposed to the mainstream public. This sent the fees of both networks going through the roof, and transactions took far too long.
While everyone agrees that scaling should be the network’s top priority, how to actually go about doing this is a divisive issue.
- Bitcoin is using the Lightning network as an off-chain solution
- Bitcoin Cash is focusing on on-chain solutions
- Ethereum is shifting towards proof of stake and sharding
- Altcoins are experimenting with different algorithms like DPoS
So, can the giants of this industry improve scalability before the newer entrants have a chance to swoop the market? Or will they maintain their dominance?
We’ve witnessed this already with the chat messaging application Kik cancelling its ICO on Ethereum and switching over to Stellar.
Some people agree that bitcoin will retain its dominance in the space of cryptocurrencies as innovations like the Lightning network and Segwit will continue to be adopted. This has led to transaction fees dropping, as well as increasing the blocktime for confirmed trades.
#7. Purchasing Digital Assets Will Become Easier
The present crypto exchanges are ill-equipped to serve the ballooning demand for investors and speculators in the space of crypto. Nearly every exchange had to close their doors for new investors back in the boom of 2017.
Thanks to this, Coinbase now has more traders than Charles Schwab, as well as several million more being created on Binance each and every week.
This could be a great sign for the market as a whole, as well as demonstration that the infrastructure surrounding the coins has a great deal to go before the mainstream will take it seriously.
Also, operating a crypto exchange is a great way for companies to make money, with fees taking from market order and market makers. This amount of money is expanded by the amount of new opportunities for companies to step it and service this demand from traders and investors alike.
Some have predicted that 2018 will be the year that cryptocurrencies will become much easier than ever before thanks to the launch of centralized and decentralized exchanges, as well as a horde of new fintech companies joining the trend, and ETFs.
Something else to note is that centralized exchanges may be both fast and efficient, yet they post a significant security risk for traders and high value investors.
For this reason, some have predicted that at least one major exchange will be hacked over the next 12 months, here’s why:
- Many exchanges have been breached over the last few years
- Exchanges act as middlemen for large amounts of money that makes them prime targets from hackers
- The majority of exchanges are centralized, thus making them vulnerable by definition
- If we keep seeing these rapid growth changes, then exchanges will face mounting pressure to improve their processes and scalability in accordance to demand. This may also lead to exchanges taking security shortcuts that will expose them as being insecure
If you hold your assets on exchanges, then you are taking a large amount of risk. There are both hardware and software wallet solutions that can make your life much easier and stress-free, especially if you are holding a large amount of coins.
As a result of the risks that centralized exchanges pose, we’re now seeing a lot of decentralized exchanges crop up to compete with their centralized platforms. So far, they are not that easy to use, but this could change as the year goes on.
Some new technologies are being introduced into the crypto market like atomic crypto swaps, so how will the decentralized exchange (DEX) market cope with this? Atomic swaps can basically do anything that a DEX can do, except they will be cheaper, faster, and having more features that a decentralized exchange simply cannot compete with.
Also, 2018 could be the year that we see value-added services to help ordinary and large-scale investors. These services are already being offered through some of the big name exchanges like Coinbase with others.
2018 could also see the introduction of value-added services to help both retail and institutional investors. We’ve seen this already for people who like to make large trades and enhanced privacy features, thus keeping their trades from being listed in the order book.
However, for most people, purchasing and storing crypto assets is not yet user friendly or secure enough for the less technically-minded people among us. So, for 2018, it’s likely that we’ll see a huge amount of new services to set in to fix these problems.
One example of a service that’s fixing the crypto market is Robinhood, which has over 3 million users. Robinhood offers commission-free trading for both Bitcoin and Ethereum, and the platform is slowly rolling out additional services. Although the service is new, we’ve already seen over 1 million people sign up with Robinhood.
There are other platforms too like CoinMetro’s ICO that was launched back in 2018. Aside from offering a normal trading platform, CoinMetro will also provide other services like bitcoin ETFs and even a managed fund services. Crypto ETF work in the same way as traditional financial products that help to ease new investors into the market.
Other trends we’re seeing are fiat to altcoins gateways, as this is important for the health of the ecosystem.
DEX are not yet ready for the mainstream to use, which then makes holding certain tokens a profitable choice over the short and mid-term. However, when you take a long-term outlook, centralized exchanges and their related tokens come with a high amount of risk.
The landscape for these exchanges could change dramatically over the next 2-3 years and nobody can predict the future. Will these decentralized exchanges see mainstream adoption? Will atomic swaps successfully compete with exchanges? Will full service exchanges win over new entrants to the market? Or will centralized platforms like Coinbase protect their market share through new features?
It’s known fact that exchanges of all sorts turn over a large amount of money, and whoever becomes the leader in this space will certainly be rewarded. However, there are too many variables to take into account, and no one can make predictions with a high degree of confidence. Due to these variables, many investors only choose to put money into the big companies and keep their position sizes small.
Top 2018 Cryptocurrency Trends Conclusion
Although no one has a crystal ball to see into the future, we can hedge against the uncertainty to limit the amount of risk we expose ourselves to whilst also maximizing our returns – which is what most crypto experts preach is derisking your investment and coming up with a strategy to pull out the principle if need be and play with profits using signals, news and insight to see what the future holds for crypto assets.
One thing is for certain: #buymorebitcoin should be trending more 🙂
Here’s a recap of everything to pay attention to in 2018:
- Platform protocols will continue their dominance over decentralized applications
- The landscape of initial coin offerings will evolve, this means you should pay careful attention to the presale process so you can reap the rewards
- Scalability of platforms like bitcoin and ethereum are a key focus (buy more bitcoin!)
- Security tokens could change the traditional finance model, making it a smart choice
- The barriers of entry for crypto will likely lower. This means that the short-term profits for these investments could increase, while the overall risk profile could rise. This means that investors are making less short-term positions and holding their coins over the long-term
With the market cap going over $800 Billion in January to all the way back down to the middle 200B cap and hovering in the 300B range currently, it will be fun to witness the growth and innovation that will come from the blockchain based internet and the utility it can bring the world, digital or physical.
We will continue to update as more macro trends come flying in…