It’s no longer news that the cryptocurrency market is going through a major decline. When 2018 began, experts were optimistic about the new ways in which the digital currency market would gain momentum. The crypto market comprises not only traders but startups, big companies, economists, governments and others, who have a positive stance on blockchain products. However, 2018 proved to be a mixed bag for this sector, with a steady price momentum for most months.
Compared to 2017, however, the performance has been mellow. Now, as we are facing the biggest crash in crypto prices in 7 years, important questions have surfaced. Will the ICO market collapse? Is it the end of blockchain technology? Or, will it take important lessons from the bearish market of 2018 and emerge stronger?
The Decline has Cleaned Up the Market
Over 80% of the ICOs in the first three months of 2018 were scams and most others didn’t make it to exchanges. The get-rich-quick vibes were sorted out as regulators and law enforcement agencies stepped in. It also cleared out less useful projects from the market. ICO creators learnt important lessons from the decline in prices. Firstly, profit level expectations had to be made realistic and, secondly, hype-building no longer guarantees success, especially in the absence of a solid product. While bad projects closed, major ones have been doing some downsizing. We recently saw Steemit losing 70% of its employees, as a result of a bear market.
The result of a bearish market will not be a likely end for ICOs but will end in survival of the fittest. We might be seeing the emergence of mature organisations that are not in the space to rake in quick money, but those who drive innovation.
ICO Project Financing has Remained Stable
Ethereum lost over 80% of its value over several months from January 2018. While market experts suggest that this was largely due to bad projects, a research report by BitMEX suggested that most ICO projects sold off as much Ethereum as they raised in their token sale. In fact, the total deficit between the value raised and cashed into fiat was $11 million.
DApp Development and Blockchain Employment Sector Continues to Grow
The crypto market cannot be judged on price changes alone. Amidst declining prices, blockchain technology remains valuable due to its decentralised ledger mechanism, which allows transparency, security and privacy in many vital areas. We recently saw the US state of Ohio plan to accept tax payments in digital currencies. DApp developments are on the rise, as are blockchain job openings. In fact, monthly DApp development is up 182% and Bitcoin job openings are up by 137% since December 2017.
This indicates that startups are hiring at a rapid pace, despite regulatory uncertainties and a bearish market.
Tougher SEC Measures will Lead to the Advent of Tokenized Securities
Now that it is clear that the US SEC will continue to toughen its stance against ICOs, experts believe that there will be a rise in security token offerings, based on stable guidelines and better fund-raising systems. A bearish market has taught ICO creators the importance of having a strong connection to fiat currencies. Prices dropped, and many ICO teams had to sell-off their Ether holdings to stay in the game.
In 2019, both utility tokens and security tokens will be in the space. ICO teams will now take proper measures to ensure compliance with SEC guidelines.
Investors Will Be Cautious
ICOs work both ways. A certain level of responsibility also lies with the investor, who has to make sure not to engage in scam projects. This includes studying a whitepaper in detail, and doing extensive research on the ICO teams. It is important to judge the viability of a project. For instance, Mark Babbitt jokingly states in his article on Medium.com that investors who think that a blockchain project can prolong life are in for a nasty surprise.
As investors become increasingly cautious, ICO teams will have to work harder to ensure sustainability, security and profitability of the products they create. Healthy competition will be the backbone of a growing ICO industry.
The crypto markets are unpredictable and volatile. In the coming months, ICO marketing teams will face grave challenges if companies fail to develop viable products. In order to keep up with investor demands, innovations will have to be continuous.