The start of 2018 has not been the most exciting time for the crypto space. The overall market value has dropped from above 800 billion and is hovering somewhere around 300 at the moment. A lot of crypto newcomers who spent no time shoving their money buying cryptocurrencies are struggling to keep hodling. Sometimes it breaks into a full-blown panic-fueled rage online. One may call it a market correction, consolidation or the burst of a bubble, one thing is clear: the industry is adapting. Having this in mind, we provide an overlook of a couple of things likely to continue throughout the year.
Global decision-makers recognizing value behind blockchain and cryptocurrencies
Following the meteoric rise of crypto-related awareness during the end of 2018, local governments and international institutions started taking a closer look at the new big thing in tech and finance.
At first, there was a lot of skepticism coming from plenty of people of influence calling the whole crypto movement a speculation, bubble or a fraud. One of the most well-known examples includes Jamie Dimon, CEO of JPMorgan calling Bitcoin a fraud last fall. It caused turmoil within the community as many other unresearched claims were voiced regarding cryptocurrencies.
Now, the melody seems to be changing. More and more governments are creating task forces to investigate and study potential applications of the blockchain technology. Some of them are considering issuing their own digital currency. Even Jamie Dimon himself back-pedaled in January to say he regrets making negative remarks about Bitcoin but still remains cautious about it.
The US Senate held a much-anticipated hearing in February during which chairmen of SEC and CFTC testified about Bitcoin and digital currencies. Surprisingly, the testimony was rather bullish. CFTC’s C. Giancarlo’s comment was: “‘Do no harm’ was unquestionably the right approach to the development of the internet. Similarly, I believe that do no harm is the right overarching approach for distributed ledger technology.”
Just a few weeks ago world leaders met at Argentina during the G20 summit and cryptocurrencies were on the agenda. Even though some calls for crypto regulations were voiced, the Financial Stability Board, backed by numerous delegations, put its feet on the ground and declared that more information must be gathered before drafting any kind of regulation.
Plainly put, global leaders have taken a closer look at the underlying distributed ledger technology only to find out that more research must be done. The current course is to proceed and use the ‘do no harm’ approach and that’s a good thing.
ICOs: survival of the fittest
The scenery of Initial Coin Offerings has been evolving rapidly. After catching fire in the second half of last year ICOs helped to raise over $4.5 billion dollars. However, this gold rush had some adverse effects on the market. Con artists and other opportunists have seized the moment to take advantage of unsophisticated market participants by offering get-rich-quick schemes.
This year started with at a swift rate of ICOs. According to Suicide Ventures, a staggering of 260 public token sales has been launched in the first two months (that’s more than 4 per day!) and roughly 40% of them succeeded to raise 50% of their hard cap or more.
What is even more alarming, 48% ICOs of February acquired 10% or less than announced hard cap. It requires a significant amount of resources now to stand out in the sea of mediocre projects all fighting for customer attention spans. Having a template-based landing page is not enough anymore to secure investments.
Investors are doing due diligence trying to separate the wheat from the chaff resulting in a decrease of ICO success rate. They are looking for endeavors with a working project, or at least available demo version, experienced team, and big partner networks. What is more, the 10 biggest projects raised 46% funds. The apparent trend indicates that only the most advanced and promising projects are able to achieve goals and the tendency is likely to continue.
“We have been working on our Open Banking platform for almost a year now and have witnessed a lot of movements in the space. People are more protective of their money and are looking to invest in projects that provide constant updates, have a Minimal Viable Product and a proof-of-concept to showcase. The era of ICO scams are coming to an end.” confessed N. Avidan, CEO of ORCA Alliance.
Hunger Games of crypto advertising
Facebook, Instagram, Google, Twitter, and LinkedIn – all of them are blocking crypto-related advertising. Google is the only one that gave the industry some breathing room to readjust before traffic is limited. Twitter just became the last one to start banning ads provided another downturn in the market bringing it back under 300 billion.
While regulators are slow on providing legislation, social media and traffic-generating titans are taking measures of their own. Recent openings regarding client data leaks, GDPR and often fraud-associated news about cryptocurrency projects, creates a tense atmosphere surrounding the area.
The end-result is hard to estimate, but it’s going to be increasingly difficult for underdeveloped projects to build communities and get traction in order to launch an ICO. On the same note, ongoing projects will have to be more creative and look for refreshing solutions while grasping public attention. Moreover, decentralized forums such as Reddit, BitcoinTalk and blockchain-oriented discussion boards will again gain popularity.
These are hard times for cryptocurrency projects and ICOs: prices are falling, traffic and advertising are limited under consumer protection claims by the internet’s giants. Meanwhile, governments are only starting to take an in-depth look at the wonder of blockchain tech. From what it looks like, cryptocurrencies tried to break-out for mass adoption in H2 of 2017 but neither the public at large nor the tech was ready yet. It led to bears taking over the bulls.
Will the remaining three quarters of the year remain pessimistic or the bulls will come back pushing steam through the nostrils? We are about to find out.