There is an overall reduction in activities within the cryptocurrency ecosystem. The 2018 bearish trend of the cryptocurrency market does not show any significant signs of reversal yet. This is forcing several companies and projects to restructure their programs, revising their timelines and shifting targets.
Establishments like ShapeShift, ConsenSys and Bitmain recently laid off between 30 to 50 percent of their workers in order to adjust into the current industry trend.
More Work For ICOs
These adjustments are also experienced in the reduced rate of participation of VCs in the areas of project funding and investments into ICOs. This has caused most ICOs and tokensales to work even harder in search of funding for their projects.
Unlike about a year and a half ago, when ICOs easily met and even surpassed their hardcaps, achieving the softcaps and initial targets today seems a reasonable achievement by most projects.
In the same comparison, the eruption of projects within and around the blockchain industry has reduced significantly. Same applies to other activities surrounding the cryptocurrency market, especially in terms of price movements and volatility.
A Pruning Exercise
Among other reasons, one major cause of this slowing down within the industry is identified by the Founder of BitLox, Dana Coe as a pruning or winnowing exercise in the industry.
Coe explains that the previous several years saw some projects that were quite frankly ridiculous (for example, Blockchain dating and Blockchain phone) and the volume of such marginal projects appears to have reduced somewhat as the easy money for such things is no longer there.
Unfortunately, the failure or eventual extinction of such seeming unrealistic project has not happened without consequences. The associated collateral damages involved have left a bitter taste in the mouth of their followers, most of whom now approach any blockchain related idea with extreme caution.
The role of speculators also cannot be left out as their short term investment strategies leaves a significant impact on the cryptocurrency market. Most of the volatility experienced during and after the bull run of 2017 are highly linked to short term investors who took advantage of the emerging market and capital flight to make huge gains.
Despite the perceived negative impact of the slump in visible activities around the blockchain industry, the development could represent organic industrial advancement in the long run. According to Coe, this development sets the stage for genuine projects to establish themselves within the ecosystem.
I find the current situation encouraging, as truly interesting projects will have their chance to shine based on their merits and capabilities. – Dana Coe
A Long Term Trend of Stability and Growth
In the overall sense of it though, the prevailing market condition leaves participants with an unclear perspective of which way the market is going to move, at least in the near future. Coe explains that the long term trend of crypto generally will be one of stability and growth. However, he notes that spikes and localized volatility may still occur, depending heavily on outside factors.
Such factors, according to him will be mainly in the form of negative news rather than positive news. “The previous volatility and runs were based on get-rich-quick fever, whereas the coming volatility spikes I see mainly being a function of fear and panic”, he concludes.