Cryptocurrencies - assets once considered hackers' novelty are taking the mainstream practice by storm. In November last year, a bitcoin was valued at roughly $650, a twelve-fold difference in comparison to today’s price of $7400. Considering this increase in value, saying that investors have realized good returns from bitcoin would be an understatement. But what is yet to come?
Cryptocurrencies are continually becoming a go-to investment, especially for risk-taking investors. Notably, the attractiveness of the cryptocurrencies is not only based on speculation but also on their growing adaptability in various industries. For example, over the course of this year several cryptocurrencies committed themselves to alliances and partnerships with technology and financial giants. Ripple’s recent partnerships with BBVA and the foundation of the Ethereum Enterprise Alliance are some examples of the numerous partnerships & alliances formed in 2017.
Furthermore, 2017 has been characterized by major defining events in the cryptocurrency world such as the billions of dollars pouring into ICO crowdfundings. These events have helped draw much traction and media attention on cryptocurrency and set the founding stones for the future development of the industry.
Considering this, cryptocurrency is likely to gain even more traction in 2018. While one can only speculate at this point, 2018 could be the year when cryptocurrencies may witness a ‘real boom’. In fact, institutional money is set to penetrate the cryptocurrency market this year. Financial giants, such as CME Group have already announced the trading of bitcoin futures by the end of 2017. While futures might be seen as the gateway to cryptocurrency, other opportunities such as the creation of crypto-ETFs might as well lead institutional investors to pay close attention to bitcoin and other digital assets.
On the other hand, the increase in media attention will also leave its footprint on the industry. Exposing average citizens to cryptocurrency will have no other impact than to inform the masses and pick their interest. Which in return, might serve as an invitation for these people to tip their toes (or dive head-in) into the world of decentralization, and invest considerable amounts of money in the industry.
In conclusion, billions of dollars are expected to be invested in cryptocurrency by investment groups and new individual investors, next year. Consequently, these events will have an important amplifying effect on the price levels of cryptocurrency and might even reduce its volatility. While one cannot say exactly what the outcome of this scenario will be, we can only imagine the magnifying effect that it will have on the prices. After all, like Seth Klarman said, “investing is the intersection of economics and psychology”.