Fundstrat Global Advisors which is a New York-based research company has reported that 2019 would see higher prices in cryptocurrencies with incremental improvements.
Co-founder of Fundstrat’s and pro-crypto Wall Street analyst, Tom Lee claimed that the crypto industry would see nine incremental improvements which would support higher prices through an infographic that uses key market tendencies from the beginning of 2017 till now.
The introduction chapter’s preview provides a crisp assessment of 2018 which is a kind of disappointment as per Fundstrat.
Some of the negative core headwinds like the initial coin offering (ICO) post-hangover, excessive exuberance, and adverse regulatory developments have led to the down surge in crypto’s growth in the form of wallet growth and launch of the Lightning Network.
ICO is an unregulated method of fundraising to support a new project via cryptocurrency. An Initial Coin Offering is used by start-ups to avoid the strict and over-regulated capital- raising process required by venture capitalists or banks. In an ICO campaign, a percentage of the cryptocurrency is sold to enthusiasts of the project in return for governmental means of payment or other cryptocurrencies, often Bitcoin.
ICOs shares features of both IPOs and crowdfunding. A stake of the start-ups or company is sold to raise money for the entity’s operations during an ICO operation.
A cryptocurrency wallet is a type of software, hardware or service that allows users to store private and public keys that are used for exchanging cryptocurrencies for various goods and services. Personal crypto wallets have extra level of protection as compared to the wallets offered by cryptocurrency exchanges. While some cryptocurrencies have their own wallets, some others do not have their own wallets but those made by third parties.
Similarly, Lightning Network is a payment protocol that works as a second layer on top of a blockchain. Lightning is widely adopted for small transactions, and it reduces the strain on the blockchain, making it more scalable.
If seen from a macro level, the weakening of the USD could be taken as a primary reason behind the price recovery of Bitcoin (BTC). Bitcoin is known as the first open-source, peer-to-peer, digital cryptocurrency that was developed and released by a group of unknown independent programmers named Satoshi Nakamoto in 2008. The issuing of Bitcoin is done by users with mining capabilities and is limited to 21 million coins. Currently, Bitcoin’s market cap surpasses $138 billion, and this is the most popular kind of digital currency. Buying and selling cryptocurrency is available through special Bitcoin exchange.
It is believed that the institutional investment is expected to increase in 2019 due to the developments in over-the-counter (OTC) trading and custody solutions, thereby leading to the crypto price recovery. Over-the-counter (OTC) or off-exchange trading is done directly between two parties, without the supervision of an exchange. In an OTC trade, the price is not necessarily published for the public. OTC trading, as well as exchange trading, occurs with commodities, financial instruments (including stocks), and derivatives of such products. Products traded on the exchange must be well standardized. This means that exchanged deliverables match a narrow range of quantity, quality, and identity which is defined by the exchange and identical to all transactions of that product. This is necessary for there to be transparency in trading. The OTC market does not have this limitation. The OTC derivative market is significant in some asset classes: interest rate, foreign exchange, stocks, and commodities.
Fundstrat also claims that there could be an upward surge in the investment in crypto following the news that Binance’s recent decision to support credit card crypto purchases and rumors like major companies like Bitfury and Bitmain are conducting some sort of initial public offerings (IPO).
As a matter of fact, Fundstrat’s claims coincided with the major market recovery with Bitcoin breaking the $3,600 price point and has managed to stay around it for three days while other major cryptos saw double-digit gains around the same time.