Since 10,000 Bitcoins were traded for two Papa John’s pizzas in 2010, the cryptocurrency has soared in value and influence. 2017 was the biggest year for cryptocoins so far, but what does 2018 hold?
Briefly climbing over to nearly $20,000 USD per coin during Christmas week 2017, a couple thousand Bitcoins can now buy you a yacht. Despite falling below $15,000 this week, Bitcoin is still the king of cryptocurrencies. While experts see growth in the future for other digital currencies, Bitcoin will likely stay on top due to other regulatory forces.
What 2018 Holds for Bitcoin and Cryptocurrency:
1. Cryptocurrency Will Soar, Crash, and Soar Again in 2018
More hard and soft forks are on the horizon for Bitcoin and other cryptocurrencies. As we published in August during the Bitcoin Cash hard fork, the Bitcoin community will at times have different demands for how the currency should operate. A larger transaction block size is one example, and that’s one that almost caused the biggest fork for Bitcoin yet.
In most cases, as these ‘forks’ take place and the blockchain is split into a new blockchain, the preceding cryptocurrency will take a hit in value. This can be seen in Bitcoins slight dip after Bitcoin Cash went live last year.
Since the beginning of 2018, some other cryptocurrencies like Ripple have experienced substantial growth. This has dropped Bitcoin’s overall market capital value below 33%.
Chief investment officer at crypto-investment firm BlockTower Capital Ari Paul predicted that Bitcoin would, at some point in 2018, trade at both $4,000 USD and $30,000 USD.
Other experts indicate that 2018 will likely have more forks than 2017.
2. Other Financial Institutions Will Invest in Cryptocurrencies
Nasdaq is rumored to be working on their own alternative crypto-exchange option, and experts indicate that regulatory bodies in the U.S. will likely approve a Bitcoin exchange fund later this year or at the beginning of 2019.
CoinDesk director of research Nolan Bauerle told CNBC in an email, “With the regulated futures markets going live in 2017, the stage is set for ETFs to gain approval in 2018. In fact, the Cboe filed for 6 cryptocurrency ETFs at the end of 2017 which could go live in 2018. This would dramatically increase how institutional investors can get exposure.”
What’s more, in August of last year, $90 billion USD investment firm Goldman Sachs admitted that “With the total value nearly $120 bln, it’s getting harder for institutional investors to ignore cryptocurrencies. There are currently over 800 cryptocurrencies out there, though just nine have a market cap in excess of $1 bln.”
3. Bitcoin Will Remain the Cryptocurrency Frontrunner
Trading at just $14,286.00 USD at the time of writing this article, Bitcoin has fallen almost $6,000 in value since the end of 2017. Yet, as we’ve discussed here and before, Bitcoin is a bubble that will burst–but it won’t go away entirely.
CEO of ShapeShift Erik Voorhees has mentioned that while Bitcoin’s utter dominance of the exchange market has given way to over half of transactions being conducted with ‘altcoins’ (or coins not on the Bitcoin blockchain), the cryptocurrency has actually benefitted from the growth of its competitors.
These alternatives to Bitcoin get players into the market, and that’s when Bitcoin can prevail. This is because, according to experts, Bitcoin has a much more mature network with the best payment transaction system in the market.
4. Regulation Will Finally Rear its Ugly Head
Over the last year, Bitcoin grew over 1,500%. Despite that, it is down roughly 20% from a $19,800 all-time high in December. As we mentioned earlier, altcoins have grown exponentially recently. The total cryptocurrency market value is above $770 billion USD per CoinMarketCap.
Regulators could upend that market growth. For example, Bitcoin dropped over $2,000 in value when China banned ICOs and IPOs in September 2017.
Managing director and head of research at venture capital firm Blockchain Capital, Spencer Bogart, predicts that regulation will be detrimental to cryptocurrency market value.
He said, “I think we could easily purge 60-75 percent of crypto hedge funds in this type of market. In this environment, funds that can call capital and deploy it counter-cyclically stand to benefit significantly.” Bitcoin is likely to be the one that emerges relatively unscathed.