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It's Official - Crypto Sell Off Is Worse That Dot-Com Boom And Bust

There’s no hiding it, you just have to look at any cryptocurrency 1-year graph but for the technology and industry as a whole it seems the last 12 months no matter how you interpret it, the good far outweighs the bad.

In any situation or market, one man’s negative is another man’s positive and the cryptocurrency downturn has had at least four clear and positive impacts which might lay the groundwork for an even stronger 2019.

1. It’s not about price, it’s about growth and value-add.

Any investor will know that there is a huge difference between price and value. For cryptocurrency, in general, as the price has gone down, the value has been increasing.

The biggest takeaway for 2018 was that development and research continued despite a sustained bear market,” says Kee Jeffreys, co-founder and technical lead of Loki Network. “The actual use of cryptocurrencies (global transaction volumes) is on an upward trend despite a significant depression in price. There were significant technological advances throughout 2018, particularly in the privacy space.

Ryan Taylor, CEO of Dash Core Group makes a sound point in the measurement of success for cryptocurrency; “Proponents and detractors alike place enormous weight on market price movements to assert the success or failure of the cryptocurrency movement,” “By that measure, 2018 was a dramatic failure following an incredible 2017. The market cap of the entire sector is now the same as it was in September of 2017. What is often overlooked is that use continues to grow and innovation remains robust by nearly any measure. Bitcoin’s transaction count is now the highest it’s been since January. Dash – the project I support – has seen transaction counts double over the past year even as prices have declined. Silently, speculation is ceding to real-world use.”

It’s important to acknowledge from an integrational and operational perspective Bitcoin and other cryptocurrencies still aren’t past their mostly-speculative phase. XRP seems to be picking things up rapidly through Ripple (the company). The foundations have and are being built even if the price doesn’t reflect that after this year.

2. The bubble is like a recession, it has cleansed the industry

One of the worst parts of adding needless, overhyped fuel on the proverbial cryptocurrency fire is the wild price predictions. Anything that speculated Bitcoin to $1billion dollars quickly faded as time went on

The bubble brought with it scammers to jump on the back of get rich quick vibes which saw regulators and law enforcers across the globe move to protect unknowing consumers and exert control. Those celebrities creating and endorsing pointless and fraudulent ICOs have stopped. A state to consider is 80% of ICOs in the first quarter of 2018 were scams and 10% only made it to an exchange successfully.

The harsh price fall cleaned out projects that required high growth and adoption from the masses. Poor and inefficient miners that were not commercially viable died a death and if they didn’t, they scaled back to more manageable operations with environmental means of surviving. It exposed those without solid investment and a structured business plan to support it. Great tech brains still can’t make it without quality, commercial execution.

In 2019, treasury management is going to become a very important aspect of all cryptocurrencies’ outlooks,” Jeffreys suggests. “Projects that raised at the all-time high of the cryptomarkets and did not liquidate into fiat or diversify into stablecoins will now be feeling the pinch as their initial raise will have seen a loss of up to 90% of its initial value. We have already seen prominent projects in the space cut staff, with Steemit having to let go 70% of its employees due to the bear market hitting new lows.

If the bear market continues, many ICOs will have to face the same reality. Many of the less useful projects are already ceasing to exist.

The dominant pressure will be fewer stable projects going away until we see a broad market recovery,” he says. “This is already happening with smaller projects simply ceasing any development and closing shop. Some big projects are announcing large reductions in personnel and growth activities, so everyone is affected. Consolidation in terms of mergers and acquisitions would be an interesting new dynamic in this industry. Maybe in the next market cycle, we’ll have more mature organizations that can use M&A to grow in such a downturn.

3. More fiat trading and protected crowdfunding

Due to know being about to short cryptos, the price dropped because people sold. Simple. The reason? The lower prices dropped, the more crypto holdings ICO projects had to sell to keep the project alive. It’s unlikely to be repeated in 2019 though. Firstly because of the lessons learned in the bearish market, and secondly because of the rise of security tokens and other fiat fundraising systems and the decline of ICOs.

Cryptocurrency’s price comeback will be anyone’s guess in 2019, but what is certain is that infrastructure and adoption-wise, 2019 will be an even greater year than 2018. Regardless of the upcoming advent of tokenised securities, I see a promising future for utility tokens. Utility tokens will play an important role in capital raising for censorship-resistant, and distributed applications, with prediction markets and distributed computing being some of the applications already underway,” said Raphael Delfin, head of research at Brave New Coin. “2019 is poised to be the year of tokenised securities, meaning that the underlying technology might be the one taking the centre stage next year.

4. Any price crash or recession pushes for quality over quantity

2018 the tail wagged the dog more than the dog wagged the tail. What means is the state of the market impacts investors as much as the investors impact the markets. As there is less and less coverage from media outlets and the general public involved, 2019 likely won’t have quite so much FOMO. Fear of missing out lead to poor, hasty and irrational investment decisions. Slower, steadier and more considered investment maybe taking place but larger powers: Institutional investors.

In a bull market, there’s always a greater opportunity for quick wins, so naturally more cryptocurrencies and blockchain-based projects emerged in the market at its peak, with companies and investors acting in fear of missing out. However, the benefit of operating in today’s bear market is that, more often than not, projects now come with good intentions and understand the importance of developing compelling use cases, building strong leadership teams, and making continued improvements in order to demonstrate their validity. With competitiveness rising, the blockchain industry is bound to undergo some sort of consolidation and the projects best equipped with a “survival of the fittest” mentality are the most likely to succeed, Lim said.

From an investment perspective, 2019 is the year for blockchain projects to move away from a “blockchain-for-everything” approach to implementation. We will see a more sophisticated industry emerge across a variety of sectors, including identity solutions, gaming and, financial services. Finally meeting the technology’s potential and having the talent, funding and vision to implement what has been created.

The year ahead

Many industry experts’ consensus has conceded that 2019 may not be the breakthrough year as 2018 was but we will see a wave of widespread use cases. As organisations looking to implement and develop blockchain applications become more focused. It is very likely that we will see some compelling use cases emerge. Tokens (like XRP) that bring real value-add for users and companies will lead the charge in 2019.

We cover foreign exchange, currency and cryptocurrency news and guides. Our readers can find currency-specific foreign exchange news, political updates affecting currency and insight into where foreign exchange trends may go, as well as the latest cryptocurrency analyses and trends.
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