One of the experts expressed his viewpoint what has influenced the crypto market for it to go down so much. He admits that the main reason that made investors buy crypto coins at the end of 2017 was their desire to exchange them for ICO tokens. In fact, they had no interest in BitCoin or Ethereum, but to buy ICO tokens that have been just issued they needed cryptocurrency as it is the shortest way to achieve their goal. After they purchased cryptocurrency, they saw that it was increasing in price and refused from selling it to earn more. It is natural who will get rid of the hen that lays golden eggs?
Later, the completion of ICOs by different startup companies led to the unloading of tokens at the end of 2016 and the beginning of 2017. It also resulted in a bigger demand for cryptocurrency as the end goal of these companies is to get fiat money to be able to pay salary to their staff and invest in new projects.
After that, there was a stage of panic. American regulators had a significant impact on ICOs in the third and fourth quarter of 2017 and it resulted in their slowing and even halt at the beginning of 2018. Since that time, people who wanted to invest in new tokens did not need to buy crypto as they could use fiat money. As a result, there was a significant lack of buyers and it caused that the market went down. Today we can see a funny dynamic as most of the crypto coins have a very high correlation to each other. All the cryptocurrencies increase in their price simultaneously and go down together too. The same situation can be spotted among tokens too. Of course, it should not be so, but the lack of bank analyses and reports led to such a situation. So, your token’s price depends directly on the cost of Bitcoin, which is subjected to the power of gravitation too.
2018 has shed light on some apparent things as it may seem. Most of the tokens that were used as a means for investing money turned out to be things that are not worth your attention time. In fact, all of them depended on the price of two basic cryptos such as BitCoin and Ethereum. When their cost decreases, they also influence the cost of tokens. Such a correlation is one of the reasons that make the crypto industry sink like a ship that hit the iceberg.
What we see is the consequences of such actions. Weak startups are disappearing, while strong and professional companies remain in the market. Nowadays, you can hardly find retail investors who thoughtlessly invest money in the newly released ICO, at least their number has decreased greatly. Earlier, the percentage of individual and retail investors was 20 and 80 respectively. Today, 80% of all the investors are institutional ones. As a result, it is possible to suppose that if a big company invests a good sum of money in the startup soon after the conduct of VC-grade due diligence, the desire of retail investors to join them will increase too.
It would be great if VCs with much experience arrive in this industry. It will help with VC funds raising, generation of big volumes of deal flow, processing the following deal flow with both centralised and decentralised groups that are experienced enough in conducting proper due diligence, give money to the best representatives as well as provide assistance to the following portfolio companies with executing and managing investor risks through 2 simple ways: diversification and portfolio construction. Modern equity funding has become more well-thought. People who invest money obtain both tokens and equity. Of course, there are individuals who prefer to own only tokens, but still, they make more reasonable decisions instead of throwing money. Another important fact is that we can spot how market valuations come back again and now only experienced and professional people can earn money.
The companies that will get funding in 2019 and years following it are going to be much more successful than ones founded in 2017. Entrepreneurs with the necessary experience and VC backing try to devote their time to the development of blockchain startups and it is proof that there was a great change in the management teams of such companies.
BitCoin is characterized by resilience as it managed to survive in different events and vulnerable cycles. Experts predict that BitCoin will continue to rise and move to the right in the long perspective. When each of the infamous currencies disappears, it will make the market more robust. A big number of managers have ruined their illusions that BitCoin and Ethereum would always grow in their value. They have been completing their ICOs traveling around the world and avoiding exchanging their cryptocurrency for fiat. In addition to the startup risk they had, they got FX (foreign exchange) risk too.
Fortunately, all the startups that are weak are going to lose all their cash very soon, since any conversions of their cryptocurrencies do not value as much as it was when they started their projects. As a result, the abundance of these cryptos that make the market weak today will soon make it grow. Nowadays, these companies have to get fiat in exchange for crypto coins at the same trading price they used to buy them.
The expert also makes a prediction about the development of such startups that will be adopted in masses and become very popular as well as encourage millions of users to dive in the world of cryptocurrencies and make the whole market grow significantly. It might be a simple video game to make headlines or a project to drive token adoption. It is going to be a product that is difficult to imagine now but it will get popular so quickly that hundreds of thousands of people will be pulled in the crypto world.
Today, it is a must for businesses to function on the basis of the blockchain to get more accuracy in its operation. It becomes obvious that not only businesses but also government and healthcare should keep data on the blockchain and in the nearest future it would be unacceptable for a company to join some business if it does not sign an agreement and trust your data to other parties. It will promote trust between all sides as nobody can change the data added. It will be a boost for the market to grow in the long-lasting trend and keep it to the right.
In 2019, many people will receive an excellent opportunity to make an investment in VC fund focused on blockchain or startup from the best VC companies with an experienced and talented investment team that can easily achieve top-quartile venture capital IRR and cash-on-cash performance.