My own hope, and it might just be my way of getting through this purgative crash in the market, is that this is the cleansing that we needed.
I’m positive we’ll emerge from it (when, I can’t say) into a crypto market that’s free of the vacuous shitcoins scattered through the top 100… If you were to have invested last September, or before, you could pretty much have picked anything and have been guaranteed a very handsome return. This scattergun approach has, in my opinion, led to an inflated worth for a huge amount of projects with no, or very little, discernible use case (think Dogecoin, or the innumerable scam ICO’s).
This style of blindfold-investment is a hallmark of an immature market (or more specifically, an immature investor base). In order for the market to mature, the investors need to do the same. This crash has absolutely hammered many, and I’m willing to guess that many in here who got in from October onwards, and didn’t cash out at fantastic gains (January), will be significantly down on their initial investment.
However, what this crash does, in my opinion, is force a maturation of the investor base. Whilst I have no solid stats to back this up, in my personal experience it appears that the average crypto investor is a 25-35 year old male, with marginally below-average social skills and little-to-no prior investment experience. They’re also, in many cases, completely fu*king wrecked. They will either hold their reduced positions, hoping against hope that the good times return; or they’ll sell up and swear off investment forevermore…. If they stick around, and they’re invested in a project with inherent value, then there’s a very good chance (IMO) that they’ll enjoy a market reversal. However, if they’re sat in dodgecoin or the likes, then they can forget about green candles. This crash has been, in effect, a reset button across the boards, no token excluded, back to September/October price levels. It’s an opportunity for people to reassess the way in which they invest and, crucially, to take a more reasoned and considered approach to the projects they invest in.
I anticipate that with this ‘second chance’ – if people are willing and/or liquid enough to take it – that they’ll be forced to mature and that the Average Joe will no longer pump his hard-earned into anything with a semi-coherent whitepaper. This’ll result in the death of the innumerable projects that have no obvious use case, have made no discernible progress, or were ill-conceived in the first case.
However – and this is what keeps me optimistic in the face of such an horrific crash in the value of my portfolio – projects of inherent value will be even more valuable than before. The total crypto market cap will be spread between fewer ‘quality’ projects and the value of these tokens will bounce back.
The above doesn’t even get into the potential Bitcoin ETF or, even more importantly in my eyes, the announcement of Bakkt ( https://www.businesswire.com/news/home/20180803005236/en/Intercontinental-Exchange-Announces-Bakkt-Global-Platform-Ecosystem ), a consortium including ICE (the owners of the NY Stock Exchange), Microsoft and Starbucks which has been formed to make Bitcoin “a trusted global currency with broad usage.”… Bakkt will facilitate, in essence, a regulated crypto exchange for use by anyone, including major institutions.
Beyond the ETF/Bakkt stuff, there’s the ongoing formation of regulatory framework – all of which points to Security Tokens being the next ‘big thing’. Look into Security Tokens yourself – they’re backed by tangible assets and so stand, for many, a class above standard utility tokens.
Major institutional money IS coming, I don’t think there’s any doubt about that.
All of the above said – and I appreciate that it’s quite a screed – I remain positive long-term for intelligent investors. It’s been said many times over, but always do your research, thoroughly, before departing with any cash. With what I believe to be a cleansing of the market, the forced maturation of the investor base, and the hugely positive background moves being made by Serious Money; I firmly believe that the people who claim that crypto is dead are not only wrong, but they aren’t paying attention to anything beyond the wildly fluctuating prices.
Ok, that’s the optimist’s perspective; roll-up for the doomsdayers 😉