Crypto startups could go bust in 2019

Many crypto companies will struggle to survive this year, according to industry observers, after collapsing prices in 2018 depleted the reserves needed to fund their businesses.

Companies in the space are already laying off workers, shutting down operations, and scaling back plans into the face of significant headwinds.

He said Anthony Maguire, formerly a Facebook employee who now runs a blockchain advisory and education business focused on emerging markets. "Tech startups go bust all the time. People just forget about them. "

Cryptocurrencies exploded in popularity in 2017, largely thanks to two factors: bitcoin's price and the explosion of 'initial coin offerings'.

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However, the crypto hype has unraveled this year.

Bitcoin's price slid throughout 2018 and it now trades around $ 3,800. The market collapsed when the supply of new investors. Without the speculators, those owning bitcoins found there was little demand or use for it.

At the same time, the prices of most ICO tokens have also collapsed as the projects have failed to deliver on their often lofty promises.

"We've got a 90% s *** coin marketplace, where people have lost money because the realizations have been there is no utility," Edd Carlton, the head of OTC trading at BlockEx, told Yahoo Finance UK.

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Blackberries

"There's less propping up poorly managed companies now than there was in January," Maguire told Yahoo Finance UK. "It's easier when you have years and years of runway and huge valuations."

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Crypto miners – companies and individuals who are underpinning the network of coins like age and bitcoin – are also struggling. The cost of "mining" bitcoins has risen even as prices.

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Lucas Friss, head of business development at Cumberland Mining, told Yahoo Finance UK. Cumberland Mining is an over-the-counter cryptocurrency trading business owned by Chicago prop trading company DRW.

Friss said: "There's a lot of questionable projects and things that are going to be out of the system." He was speaking generally and did not single out any specific projects.

As well as crypto startups going under, Maguire predicted that many crypto investment funds will also shut down in 2019.

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