The crypto market’s historic bull run brought swarms of new investors to the market and catapulted crypto into a multi-billion dollar asset class. Bitcoin became a household term nearly overnight. “What is Bitcoin?” and “How do you buy Ripple?” even topped Google’s most searched phrases of 2018.
Crypto’s fame came at a high price. The market took investors for a wild ride, with Bitcoin hitting nearly $20k and then slowly winding down and up and down again, finally falling even lower than where it started 365 days ago.
With skeptics saying “I told you so” and evangelists rallying behind “HODL” and “BUIDL,” the future of crypto may at a glance seem unclear. Despite the red arrows and noise from both sides, I’m more confident than ever in crypto’s future. Underneath the surface of the bear market, the foundation of a revolutionary industry is being built.
The Bear Market is Good for the Future of Crypto
Blockchain networks struggled to handle the influx of demand at the end of 2017, significantly increasing transaction fees and processing time. The market’s wild volatility strained existing infrastructures and exposed the insufficiencies in the fundamentals of the market. The crypto industry's shortcomings were put on center stage, inspiring a wave of innovation and new businesses. Even as crypto's market cap plummeted, the industry has continued to build and mature exponentially, with more businesses jumping in every day.
In Bitcoin’s short life, it has already survived four major corrections, 2010, 2012, 2014, and 2016, and is now enduring its fifth. It has fallen and risen on its own, each time gaining strength and popularity. The last time Bitcoin went from $1,000 to $250, people lost hope, and then Ethereum was created. Today, Ethereum’s market cap is over $10 billion, and thousands of applications and businesses are built on its blockchain.
The impact of all great technological change is often overestimated in the short run and underestimated in the long term. This theory is called Amara’s Law and can be used to explain the rise of the world’s most successful technology businesses like Amazon and Apple. Former Wall Street Analyst and Crypto Investor Lou Kerner references this phenomenon in this insightful blog post, written when Bitcoin was worth more than $5k.
Kerner reminds us that crypto should be played as a long game. “It was a good strategy with the internet, and it should be a good strategy today with crypto," he said.
In 2001, Amazon’s stock was valued at just $6. In the days following September 11th, it would be hard to imagine that less than 20 years later that same stock would hit $2,000 a share.
“The impact of all great technological change is often overestimated in the short run and underestimated in the long term.”
Paradigm switches don't happen overnight or even over decades. Today, we're building the technology that will disrupt the future. This bear market will produce greater innovation than we can even imagine.
Quality Will Survive
Bear markets separate the contenders from the pretenders. A large number of Initial Coin Offerings have already failed and some research predicts that nearly 80 percent of all ICOs launched in 2017 were scams.
The pain continued for ICOs in November when the SEC cracked down on two tokens, labeling them as securities. Market conditions combined with increased regulatory scrutiny has weeded out many of the bad actors, clearing the way for legitimate tokens and businesses like Voyager to build.
As the crypto winter continues, more companies will be tested, and only those with valuable products, adequate funding, and long-term business strategies will survive. As more legitimate businesses emerge and prove their worth, more investors will feel confident entering the crypto market.
The price of Bitcoin grabbed the world’s attention. It created excitement, fear, and even infamy. But it’s the technology’s potential that has continued to draw in new investors, despite a bear market. This year alone, the total number of crypto users doubled from 85 million to 139 million. The largest, most successful institutions in the world like NASDAQ, ICE (New York Stock Exchange’s parent company), Fidelity and Goldman Sachs are making substantial long-term bets on the future of the industry. The investments are seeded, now it’s time for them to vest.
The next bull run is set to be bigger than ever before, and when it arrives, the industry will be fully prepared.
At Voyager, we’re committed to building the broker the crypto market deserves. With our trading app, we’re excited to offer investors a fast, secure, commission-free gateway to the crypto market. We’re continuing to invest in our product and the future of this exciting new asset class.
We know that the most profitable times have yet to come to the crypto market. When the next market rally comes, Voyager will be there to power it.