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As I see it, investors in 2017 – and especially in the fourth quarter – wanted to buy Bitcoin (BTC) and Ethereum (ETH) for the sole purpose of trading it with specific ICO tokens on which they wanted to invest. The buyers of Bitcoin and Ethereum did not want to own Bitcoin or Ethereum. They wanted to buy the first generation tokens of initial tokens (ICO), but they needed to buy Bitcoin and Ethereum as a short way to get what they wanted at the end. The owners of Bitcoin and Ethereum did not want to sell. They were watching the price of their holdings increase, so why should they? They were also believers in Bitcoin and Ethereum. So, in a "bid-ask world", the price has risen.
Then, startup companies that have completed their ICOs have become whales, which have started – as a group – to download their tokens in December and January, thus reversing the dynamics of the huge demand for Bitcoin and Ethereum to all sellers. of Bitcoin and Ethereum. After the hangover of the new year vanished, startups had to exchange their encryption with a fiat to pay the engineers and build their startups.
Then, it was a bitter panic. Pressure from US regulators in the third quarter and fourth quarter of 2017 caused a slowdown and an almost total shutdown of ICOs by early 2018. Subsequently, ICOs stopped or drastically slowed down. . New token broadcasters have started to accept the fiat without the need to go through Ethereum, which has killed more requests and left only sellers and "hodlers" and no buyers. In a "bid-ask world", the market has thought. An interesting dynamic of the current market is that the prices of all cryptocurrencies are highly correlated with each other. Just look at the price of any coins on CoinMarketCap and you will notice a perfect correlation between the prices of most of them. Bitcoin and Ethereum go up and down together, and many other tokens are related in the same way. It should not be this way, but without banks that analyze and report on these startups – as they do for Apple, Amazon, Microsoft, etc. – it's like that for now. So, Bitcoin can increase or decrease the price of your token, but now it seems that gravitational force works in both directions.
In 2018, something else developed. It became clear that all these funded ICOs were not diligent with angels or VCs who were experts in real technology: they were mostly not the tokens you would really want to invest in. Previously, all these coins were related to the rising price of Bitcoin and Ethereum, but now they are dragging them down. They are all related, and the large section of the overall capitalization is sinking the "crypto-ship" in general.
What will happen is that all these weak startups will eventually be emptied, and we will end up with some decent and even fantastic companies. Today, retail investors in Southeast Asia and around the world no longer play and throw money to the last ICO to launch a blockchain event – or at least not to the volumes of the fourth quarter of 2017. It was 20% institutional (VC) investors and 80 percent retail. Now, it's 80% of institutional investors, if not more. For me it is logical that, if the strong brand VCs such as a16z, Pantera Capital and 7BC.VC invest in a startup of their broad investment funnel after conducting VC level due diligence, retail investors will want to invest – following the guide of the VC in jurisdictions where this is in accordance with local securities laws (or, in the United States, if you have launched an S1, Reg A +, etc.).
Now is the time for the arrival of VC experts to raise real VC funds, generate large volumes of business flow, process business flow with fully centralized and decentralized qualified teams to conduct due diligence, finance the best and help these portfolio companies execute and manage the risk of investors through diversification and portfolio construction. We have seen a return to sound equity financing – and not just for tokens. Investors now have equity and tokens. Some decentralized "pure games" require only tokens – but again with due diligence from the old school – before throwing money around. We are also seeing a return to market valuations, rather than a group of high school dropouts seeking a pre-money valuation of $ 50 million or $ 100 million without ever having met a payroll or making any substance before getting that kind of evaluation.
The new companies to be financed in 2019 – and to be listed in 2019, 2020 and 2021 – will be on average much better than the 2017 cohort, with a consequent recovery in the market. VC's experienced entrepreneurs are now working on startup blockchain, which means that the population of management teams has evolved beyond the original Bitcoin anarchists.
Bitcoin itself is resilient, proven by its survival of multiple Mt. Gox type events and numerous up-and-down cycles. The long-term curve for Bitcoin is at the top right. After the notorious coins run out of money and disappear, the market will become much more robust. Many of the managers became disappointed because of their experience of traveling the world and completing their ICOs, thinking that BTC and ETH would go up and down while they could not exchange enough of their fiat encryption. Not only did they have the risk of starting up, but they foolishly added the exchange rate risk (foreign currency).
So, the good news is that these weak startups, which have never had to be financed, will end their money sooner than expected, because their crypt is useless when converted into fiat than they thought at the time they had completed their funding. The emptying of these currencies which is weakening the market will push the market towards the top. Today, startups exchange their encryption in fiat when they get it.
I also predict that we will see some killer startups taking off and generating mass adoption, which will bring mainstream users into the cryptic world and – in a gravity-related world – this will take off the whole market. We'll probably see some video games become a huge feeling – like Angry Birds – or something that will drive the adoption of a token. I expect to see something else that no one has ever thought, like Skype, that everyone starts to use, which will bring huge populations into the cryptic world, since the value will simply be there.
It is imperative that all companies move on the blockchain so that none of the parties can tamper with the numbers of how many "widgets" have been sold or who is paid what. All data relating to businesses, government and health care should be on the blockchain – and very soon, it will be unacceptable without this stipulating a commercial agreement and trust the other party to tell you how many widgets have been sold in China, the United States or Africa. Once these commercial transactions or elections are on the blockchain and no one can tamper with the data, all the parties can trust one another. The big picture here is that the market will see a big rally and a long-term trend towards the top and the right.
2019 could be an excellent time to invest in a blockchain-focused VC fund or invest in blockchain startups that take on board lessons from VC with the best performance that have a strong investment team with experience with experience in realizing IRR capital performance risk with a high quartile and cash-on-cash benefits.