For the past several months Bitcoin has been on the up, increasing its value by 50% and hitting its highest price so far in 2019. And alongside it, altcoins have been enjoying a significant market boost. With indicators suggesting a bull market is back for cryptocurrency, there are many promising factors that mark this run as different than the infamous rise and fall experienced by Bitcoin investors during late 2017, early 2018.
Here are some of the major changes in the cryptocurrency and blockchain space that bode well for Bitcoin and altcoin’s market prices:
Market maturity: Less ICOs, more major names entering blockchain
Initial coin offerings (ICOs) and other token sales exploded in the wake of the 2017 Bitcoin bull market as companies looked to get in on the increasingly lucrative cryptocurrency market. Unfortunately, a significant number of the projects raising funds in this way either failed to deliver on their promises to investors or never tried to do so in the first place. In 2017, an estimated 80% of ICOs were reportedly scams. Of course, the mistrust that this sparked negatively impacted the performance of the cryptocurrency market as fewer investors held faith in many altcoin projects.
Last year the bear market wiped out many of the projects that lacked substantial promise or were unequipped to carry out their plans. While there is still an abundance of ICOs being held, investor attention has dwindled due to a continued lack of credibility.
The blockchain market has matured far beyond start-ups holding dubious ICOs, with the technology now being utilized by some of the biggest, most trusted names in technology, logistics and retail this time around. Such major players include Microsoft, Walmart, Pepsico, and Luis Vuitton.
The rise of state-backed cryptocurrencies, stablecoins, and the JPMorgan Coin
Again, these three rising trends in the cryptocurrency space represent growing levels of trust, or support in the technology behind them at the very least. A significant number of central banks including that of Saudi Arabia and the UAE continue to explore the option of launching their own state-backed cryptocurrencies in a bid to lower remittance costs and provide an additional reserve for domestic payments.
Alongside the growing prominence of stablecoins, both appeal to “another kind of investor”, one seeking greater stability than that the cryptocurrency market could offer in 2017. Indeed, although the first stablecoin was launched in 2014 the concept did not gain great notoriety until last year.
JPM coin was launched in February 2019 as the first major US bank to create its own digital currency. Indeed, it can be considered to be the first ‘institutional’ cryptocurrency. This won’t appeal to a lot of established cryptocurrency investors, but it may well expand the market into a new audience.
A transforming market?
What these changes to the market show, along with growing support for cryptocurrencies among mainstream investors, is that the cryptocurrency market is appealing to a whole lot of investors it probably did not reach last time around; there are many ‘safer’ options in the market today.
It was perhaps not surprising to experience a market turndown last year while sub-standard blockchain projects collapsed. What is different and promising about the market today though is the additional seasoned professionals that have joined the industry.
As long as the blockchain industry can continue to avoid a stifling regulatory ceiling, it would seem to put the cryptocurrency market in a far stronger position for 2019.
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