The recent crypto crash this February brought forth uncertainty and doubt in 2018. Could it be a bad omen? Taking into account the past 12 months, a parabolic growth in the price of cryptocurrencies has witnessed.
However, the recent correction is excellent news for the space in need amalgamation. In a trifling market, these corrections are beneficial on a long-term basis as they clear out speculators. During such episodes, companies without product-market fit will accelerate their burn rate and fail faster.
There are many ICOs without a single tangible product, clear roadmap and detailed implementation or glaring flaws whose token market values remain sky high for no profound reason.
Considering the whole picture, there is a positive secular trend in terms of overall market capitalization as more and more people are adopting blockchain technology and cryptocurrencies. Even with a record of sharp corrections more than 60% from all-time highs, events happened before fail to dampen the enthusiasm of most veterans in the blockchain space.
Here are a few predictions for 2018 and beyond
- Higher Priced Bitcoin and Other Top Alts: Towards the end of 2018, the entire cryptocurrency space may pass $1 Trillion in total market capitalization. A larger bearish scenario would require the market a couple of years to amalgamate, recover and regain its previous momentum.
2. Higher Quality Entrepreneurs and Developers turn to Blockchain: Still many are not entirely convinced about the real uses of the blockchain, but the scenario is changing. Higher token prices will lead to more blockchain startups making highly competitive offers to developers jostling for talent, in synchronization with likes of Amazon, Google, Apple, and Facebook. Working on tokens and protocols will ultimately reshape the startup landscape in Silicon Valley and the rest of the world.
- Delisting of Many “Useless” Tokens on Exchanges: The exchanges have three options: a)Delisting “ useless” non-utility tokens not carrying out the functions they claim.b)Registering them with SEC, or C) Close their doors. It goes hand-in-hand with the SEC’s impending regulations. Exchanges are incredibly critical for providing liquidity in markets. In an attempt to comply with the new regulations, exchanged will delist an increasing number of tokens- which lack a clear product or use.
Companies that sold tokens which are deemed to be securities will likely be fined. US exchanges carrying tokens that are considered to be unregistered securities will find themselves in trouble.
- Shift from Ethereum to Other Platforms: More and more companies will continue to realize the impractical and expensive fees of Ethereum based protocols and subsequently will consider alternatives. Undoubtedly, smart contracts on Ethereum’s Turing Complete platform allow much room to express, it comes at very high costs. Moreover, network congestion can make transferring data and execute smart contracts a costly process. Developers will be pushed to consider building on other platforms like Stellar, NEO and other DApp platforms due to scalability problems on Ethereum.
- The rise of Decentralized Exchanges: In the longer term, these efforts will energize the emergence of distributed technologies and decentralized exchanges like the Stellar Distributed Exchange and 0x Protocol.
- Central Banks Embrace Blockchain Technology: Even in the presence of regulatory scrutiny, more government experimentation with blockchain will continue. Keen on reducing friction and lowering costs. Central banks will experiment with blockchain-based settlements. Consequently, foreign exchange markets and cross-border remittances will become more efficient and cheaper for people to use. They will be the first steps towards a global cashless society.
- Intensification of China’s Crypto-Prohibition: China is currently implementing further restrictions on VPN providers to prevent capital outflows into ICOs, exchanges were also shut down in the fall of last year. These efforts will only strengthen decentralization by encouraging P2P networks, diminishing centralized platforms like significant exchanges.
- Intensified Promoter Scrutiny: Emerging self-proclaimed “Youtube experts” in the crypto space evangelizing high expectations of ROI for projects have undisclosed special private deals. It creates an environment where influencers can potentially harm Main Street investors with unqualified investment advice or manipulate markets with bogus schemes. It is expected that the Federal Trade Commission and other consumer protection agencies will take action against such promoters.
- Declining ICO Success Rates: Even though ICOs may hit their hard caps this will be done with higher prices for Bitcoin and Ethereum in 2018, so the total token raise will be much less when compared to past ICOs. There will be many ICOs that will fail to hit hard caps or critical product milestones. It is expected that SEC will introduce concrete guidelines and regulations in 2018. To protect the market from fraud and market manipulation, ICO’c will be subjected to the SEC’s guidelines as they have no product The few major ICOs that do occur will likely take the shape of long-awaited reverse-ICOs (like Telegram, Overstock, Kodak, etc.) and attract the majority of capital in the pre-sale. With this trend, we will also see mainstream investor enthusiasm die down significantly.
- Taxes and Anti-Money Laundering Laws Will Be a Bigger Issue than Security Laws: Accumulated tax liabilities will apply to ICOs past, present, and future and all US entities in the space. The obstacle is not the SEC; it’s the IRS and FinCEN. A few years ago the IRS deemed some cryptocurrencies to be property, which means every time crypto is used for sale or exchange it’s potentially a taxable event.
The IRS has launched a John-Doe summons of Coinbase so now every transaction of $20,000 or more has to be reported.
FinCEN recently said that companies selling tokens are money transmitters and must comply with relevant KYC/AML laws. FinCEN had fined Ripple years ago for operating an unlicensed money services business.
Several recent token projects have failed to hit their sales or fundraising goals. This year paves the for great diligence in the space – from both community self-governance and regulators. The market will continue to shift to altcoins. The trends will continue to grow when the SEC, IRS, FinCEN, and FTC come with a strict handle. The market will continue to shift to altcoins