OneAlpha, an Israel-based division of Europe’s First Digital Assets Group, recently published a report that suggests the news we’ve all been waiting to hear: Bitcoin may be out of the woods.
The 2018 bear market has been a trial to many, with total crypto market cap dropping as much as 75% since January. However, OneAlpha points out the benefits to this extended downtrend. For one thing, following the great crypto bubble of 2017, an influx of speculation in the crypto market led to a lot of blockchain projects that are, well, fluff.
The report states:
As it stands today, over 60% of the top blockchain projects have no useful function, while only two out of the more than 800 dApps on Ethereum have over 1,000 daily users (both of which are exchanges.
And while everyone likes to see their portfolio worth increase over time, it cannot be denied that the bear market provided a much-needed shakedown of the oversaturated crypto market, culling it of all but the strongest, most innovative of projects and forcing investors to be more discerning in the future.
The Q4 2017 Digital Gold Rush
Anyone who’s been hodling for a while will remember the mass hysteria that Bitcoin’s soaring price caused this time last year. It hit a record high of $10,000 at the end of November, and had nearly doubled that by the end of December. People who a few months ago hadn’t even heard of the digital currency were suddenly opening Coinbase accounts and buying Bitcoin on credit.
And, as we’re all so painfully aware of, the bubble everyone was warning us about did indeed burst in January 2018. Bitcoin went back to $11,000 by the start of February, dragging the entire market of altcoins down with it, and continued falling.
At time of writing, Bitcoin is trading at roughly $6,500, up somewhat from August’s low of $6,100 but it still has a long way to go.
A Harsh but Much-Needed Medicine
Yes, it has been a disheartening year for those who follow Bitcoin, and it’s still possible that the highs of last December were a fluke, brought on by a dangerously volatile currency.
However, the authors of the OneAlpha report point out that investing in the crypto market solely to make a quick buck is naive and, indeed, not getting at the true spirit of crypto. While prices have fallen and the less-committed – both investors and blockchain projects – have been cleared out of the market, those projects with true innovation and potential and the tech to back it up have been quietly working on developing their platforms, roadmaps, and communities.
Regulations have been brought in, but they could be a good thing for the industry. Crypto is slowly but surely gaining stability earning its status as a mainstream, legitimate market.
OneAlpha sum this up:
the prolonged bear market provided the sector with much-needed relief, lowering valuations to a more sensible level. Despite the considerable correction, a large portion of the value represents the future potential of the network rather than its current one. The December 2017 and January 2018 boom and bust had a cleansing effect on the ecosystem, removing many of the speculators and leaving mainly real investors, operators and builders in the market. This is what was necessary to move forward and build a successful ecosystem.
Bitcoin’s Not the Best at Everything
In addition, the report states that while Bitcoin remains the best and strongest currency, Ethereum outdoes Bitcoin’s blockchain by a mile.
The authors point out that the 2nd-largest cryptocurrency by market cap has shown greater influence in many ways on the crypto and blockchain space:
Currently, bitcoin is gaining strength and captures more than half of the total crypto market cap. Ethereum captures 10 percent of the total market cap. There are currently more than 2,000 traded crypto assets and more than 1,000 unique tokens worth around $14 billion. 87 percent of the tokens are Ethereum-based, with NEO and Waves capturing around 2.4 percent each… Of this valuation, it is noticeable that bitcoin captures about 71 percent of all currencies and ether 54 percent of all platforms.
ICOs Democratizing the Investment Pool
The report also took a look at initial coin offerings (ICOs) and the effect they’ve had in getting people involved in crypto investment. In fact, for the first time ever, ICOs took the reins from traditional angel and seed VC investors, with $20 billion raised across 790 ICOs over the course of 2018.
While a good deal of these ICOs are scams (OneAlpha data estimates around 20%, with $1 billion stolen from investors via phony ICOs), they are also a good way of encouraging investment in startups by populations who might not have been able to before, especially in areas like the US and China.
2018’s biggest ICOs, according to OneAlpha, have been EOS ($4.2 billion), Telegram ($1.7 billion), and TaTaTu ($575 million).
An Optimistic End to 2018
Blockchain has had a tough time, it’s true. But OneAlpha are steadfast in their belief that this is not the doom of crypto after a 10-year run, as many naysayers are claiming, but the growing pains of an industry on the hard road to maturity.
They believe that, with responsible institutional investing and purposeful regulation in the interest of protecting both consumers and projects, blockchain as a near-infinite potential to change and disrupt.
Alon Aginsky, CEO of BlockchainIL, leaves us with this uplifting prediction:
Over the next several years, blockchain technology will be flooded with projects with innovative use cases, brilliant and adaptable teams, and, most importantly, projects that will have meaningful impact on the lives of everyday people. The best days of blockchain technology certainly lie before us.
To read the OneAlpha report, click here.
