Technology advisory and investment firm GP Bullhound has published its “Technology Predictions 2019,” in what might be music to the ears of disgruntled investors right now, it says we have “yet to see the best” of cryptocurrencies.
Should another prediction be trusted? GP Bullhound says only one of its 2018 predictions, the decline of email in the workplace, was incorrect. Its prediction of a “boom and bust” of ICOs in 2018, sadly, seems to have rung true. ICOs are indeed at crisis point.
Institutional Money Will Flow
GP Bullhound is bullish for 2019 believing that long-awaited institutional money will flow into cryptocurrency led by blockchain’s “full speed” activity.
“Given the pace of innovation,” the firm said in the report, “There is a thin line between being first and being last. Since many market participants on the financial and strategic side are aware they largely missed benefiting from the digital revolution, we expect they’ll ensure they do not miss out on the blockchain and cryptocurrency revolution.”
Institutional investors will first look to funds and equity investment into blockchain as well as cryptocurrency-based financial instruments and derivatives. This will not all be financially motivated, it says, but:
“Backed by increasing demand we see on the corporate and family office side and their desire to build positions.”
The regulation of bitcoin and ether as “non-securities,” bitcoin considered a “replacement” for fiat currency, and Ethereum’s ether seen as a commodity offers security to the two coins. This will allow capital to flow into the sector both directly and increasingly through derivatives.
STOs Will be a New Focus
The “massive wave” of compliant security token offerings (STOs) ready for market will become a new activity focus for the sector. And, GP Bullhound believes, “promising” cryptocurrency custody services will comfort professional investors. At the beginning of the recovery:
“Offerings structured as tokenized financial products are expected to initially absorb substantial volumes and allow avoidance of direct handling of cryptocurrencies.”
Liquidity is improving in the sector as large banks enter, regulated exchanges emerge, and stablecoins provide a “haven” for investors. The hype in 2019, say the advisors, will be more technology and product focused and that:
“Overall, the correction is ongoing and healthy for the sector to allow the technology to catch up.”
Dubbed the “crypto queen” of Switzerland’s crypto-valley Zug, Smart Valor CEO, Olga Feldmeier, adds her view to the report:
“The crypto market is still in its early stage and so high volatility is to be expected. Over the mid-to-long term, cryptocurrency is a new alternative class of digital financial products that offers many benefits.”
Today, the market correction still appears to be in play, bitcoin could drop below $3,000 yet, but despite the decline, a recent report from the Cambridge Center for Alternative Finance says 54 million new cryptocurrency users joined the cryptocurrency sector in 2018.