Something that I have been pondering over the recent weeks as I have been thinking more about the state of the crypto markets lately is how long it will take for the markets to recover, mature & boom. What keeps me sane during this rather long (6 month) bear market is thinking about the long term. Crypto markets have taken a beating in 2018. During peak mania in January of 2018, the total market cap was around $820 Billion and now in July 2018, the market cap is hovering around the $250 Billion area.
There are a few things that you have to keep in mind with these valuations, however volatile. Even now, the crypto market cap is still highly overpriced. The only thing we need to be honest is time. We need time to recover, time to mature and time to boom.
Regardless of when the market starts to pump like crazy again in the short term, what is more important is when the market will mature, valuations will be fair and we see widespread adoption from consumers, corporations and institutional investors. The point where the crypto markets mature is when your investments will start to show their true value (Provided your investments are solid picks and perform well).
I believe we are around 3 years away from hitting critical mass, and in crypto that is a long time. I get it. We are programmed to think short-term, especially in the digital age. We love instant gratification. We check reddit, twitter, bloomberg, Cointelegraph & youtube on a daily basis not to mention robinhood and blockfolio. And we see progress every day. Things move fast in crypto, but we still need more time.
Many of the projects I am invested in and am following for future investment didn't exist before 2016 or 2017. And a bulk of utility tokens, particularly Dapps (Decentralized Applications) came in during the ICO boom in 2017. Below are 5 reasons why we need more time in this market to hit critical adoption and officially go mainstream:
1. Regulatory Acceptance & Clarity
- Will regulators and governments around the world adopt new standards for the new emerging asset class of cryptos?
- Will regulation be negative and stifle the market/innovation or will it help the market mature and grow?
2. Institutional Acceptance & Investment
- Will custodial issues be remedied and institutions such as banks, pension funds & asset managers have ease of accessibility in the crypto market? (There will need to be regulatory guidelines before the financial sector can pounce)
- Will there be plenty of crypto ETFs and index funds for them to invest in or create?
3. Fluid End-to-End User Interface & Experience
- Can end consumers and everyday non-technical (Average Joes) come into the market conveniently, purchase crypto with ease & plenty of options, store safely and use DEXs easily?
- Will there be a fluid UI/UX experience for consumers much of how traditional app store and apps are today (Think Robinhood, Facebook, Netflix, etc.)?
4. Proven Business Models & Revenue Generation
- Can Blockchain Platforms & Dapps become Profitable & Start Generating Value/Revenues (Currently the crypto markets are much too speculative and valued based on market manipulation or the premise of future growth)
5. Solving Technical & Operational Scalability, Speed and Security
- Can Blockchains & Dapps scale and be ultra secure with ultra TPS? (This factor is very important for mainstream and institutional adoption of cryptocurrencies & actual usage of cryptocurrencies - We need to be able to use cryptocurrencies, transact with them, exchange them to other cryptos or fiat quickly & must have more security in the market)
- Will cryptos achieve their promises and truly be a disruptive economic force?
Many of these challenges are being solved everyday and as we speak on an incremental and little-by-litter basis but don't expect all of these challenges to be solved in a week or a month from now and your investments to magically moon. Sure we might get ahead of ourselves as we did in late 2017 and the markets might see a bull run sooner than later. However, don't think short term. Think long term about what your investment will be priced when it has actual business value, utility and use case. When crypto is accepted by governments, regulators, institutional investors, plebs (Average Joes') & corporations. When scalability and UX/UI challenges are solved. Because I guarantee you, your coins will be priced much higher when they are actually worth something than it will be by pure speculation and hype.
I predict that these changes will take at least another 2 years at minimum and that it won't be until 2020 that most of our utility tokens will actually become utility tokens, worth utility tokens and valued/priced as such. Please invest in coins that you think will survive until at least 2 years from now and not just some scam, hype or shit coin. Take this time to research your coins thoroughly but don't stress too much about price volatility and as always keep your investment safe while you HODL and keep it in a cold storage hardware wallet. HODLing is the strategy that wins in the long term along with diversification (in other cryptos and in other asset classes such as Stocks, Bonds (Treasuries), Commodities (Gold). In crypto, make sure you diversify your portfolio to include large caps, mid caps and small caps as well as different types of coins and usecases (Platform, Dapp, ICO, STO, ATO, etc).