The Current ICO Climate and Recent Market Trends
Although many people both in and out of the blockchain industry are a bit skeptical of its future because of the long bear market recently, there is reason to believe that will turn around in the near future. Before addressing the market, it is important to understand how this current climate influences Initial Coin Offerings (ICOs) that are just now entering the market.
The Effects Market Trends Have on ICOs
Anyone with a reasonable amount of experience in the blockchain industry knows that 2017 was the first real booming year for ICOs, particularly the latter part of the year. During this time, many ICOs were raising absolutely ridiculous amounts of money for their hard cap and people were throwing money around everywhere because their thriving portfolios allowed them to gamble on some lesser known projects. The massive bull market towards the end of 2017 contributed heavily to these statistics.
Also, because of the amounts of money that were being raised, many people who had intentions to start a blockchain project and run an ICO now had a legitimate reason to do so. Consequently, starting in the beginning of 2018, we saw a substantial increase in the number of ICOs per day. This should come as no surprise to anyone. Hypothetically speaking, if the bull market had continued until now then most of these ICOs likely would have succeeded and been able to comfortably function. But, this was not the case.
We saw a drop close to 90% in the valuation of many tokens, market caps, and even exchange volume. This caused an immediate snowball effect, which resulted in a significant amount of ICOs failing so far this year in 2018, due to the amount of money that left the industry. Yes, it is true that this is a cause for concern, but on the flip side there is no need to panic.
It’s not necessarily bad for most ICOs to not get past their crowd sale. Given the amount of projects that already exist, naturally the market would become fully saturated if every single ICO was able to raise its hard cap, even projects which are illegitimate. It is better long-term for only a set number of the strongest projects in the industry to be the front runners. Why, you ask? Well, one of the most important factors is reputation and credibility. When we see projects like Titanium, Centra, Munchee, BitConnect, and more, raising absurd amounts of money and then being exposed for fraudulent activity, this does significantly more harm because outsiders instantly become more skeptical to enter the market so we lose lots of potential new money through bad publicity and a reputation for being a scam industry.
Let’s also not forget that markets are cyclical, so a bear market isn’t even unhealthy for the market. It’s actually quite normal. People just panic because the drop in everything was so significant that it seems detrimental to the existence of the industry, but we are dealing with the most volatile market on the planet. Thus, it is important to put things into perspective when analyzing the current state of the market and ICOs. A “Survival of the Fittest” mentality for the industry, blockchain’s version of Darwinism, is most likely what the end result will be at the completion of the bear market, and this is not bad for the industry because it will build its credibility to give it the chance to go more mainstream once we enter the next bull run.
The Gradual Paradigm Shift for Investors
Two of the largest determining factors for cryptocurrency investors are the amount of liquid funds available as disposable income, and the value of the assets in their portfolio. Naturally, when the market is booming like it was in December 2017, people are willing to take chances on some altcoins that they otherwise would ignore, because they have that extra money available and they want a chance to get that 100x gain. However, the landscape has changed drastically since then. Investors have become much smarter. Part of this is due to the fact that blockchain has been around for another year by now so gradually the industry will get smarter, but the biggest reason is the bear market.
Again, this is not necessarily bad at all. In order for us as an industry to achieve what everyone ultimately wants, which is mass adoption, a transformation must take place, and it starts with investors and community supporters because by demographic, they are the largest in the entire industry. So as investors begin to get smarter, the resulting effect will be a flow of money into only the strongest projects in the industry. This will help to eliminate all illegitimate, fraudulent, pump and dump type projects and reduce the overall number of projects in the industry. The objective should be a market that is solid from top to bottom with credible projects, strong teams, revolutionary products, and optimal transparency.
Signs of Market Recovery
Over the last two weeks, the market is finally beginning to show signs of life, particularly bitcoin and altcoins. We recently saw bitcoin break 7,000 USD, and some 20–30% gains for many altcoins as well during this period. The bear market has lasted for about 7 months to this point, but it appears to be beginning to trend upwards. This is one of the most important factors for the entire industry because now that the public is more aware of blockchain than they were a year ago, the next bull run will see lots of new smart money flowing into the industry.
When this occurs, we will really start to see the significant growth, even outside of the industry, as more businesses will begin to integrate blockchain technology into their ecosystem and also accept cryptocurrencies as methods of payment for goods and services. This will be the true beginning of the mass adoption that is necessary for the industry to thrive. Currently, the adoption is too small scale because of a combination of factors, led by the fact that the bear market has some businesses and consumers apprehensive. Once the market recovers, and the industry cleans up the aforementioned transparency issues, we will be living in a much different society within the next few years than we are now. We, the population of blockchain advocates, have every reason to trust the technology, its growth, and its positive impact on business in various industries. The industry is slowly climbing out of this minor setback and we can expect an incredibly lucrative next few years, filled with advancements in the industry, widespread product adoption from many blockchain companies, a more knowledgeable user base, the return of more money into the industry, and exponential growth in popularity. The future is bright!
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@elysian-ely, I do not understand anything written