The first half of 2018 had been disappointing for cryptocurrency investors. The cryptocurrency market as a whole lost around 70% of its value compared to the end of 2017, raising concerns on the future of digital assets. Several reasons had been behind the move, as we will describe below, but in this article, we will explain why we think the market is in a good technical position right now.
Why are we here?
The enthusiasm that fueled the bull trend from 2017 had been steadily decreasing in 2018 due to a number of important factors. Firstly, the market participant had begun to be fully aware of the fact that cryptocurrencies have certain weaknesses. A number of important exchange hacks and thefts have shown that several security vulnerabilities and an underdeveloped infrastructure are issues that could pose some serious threats.
Secondly, with the rise in the market cap (which had exceeded $800 billion at the end of 2017), governments across the globe had been starting to address the issue of regulation for cryptocurrencies.
Several important steps had been taken, especially from countries like the US, South Korea, and Japan, which represent some of the largest markets for cryptocurrencies. However, investors across the globe had been worried that regulation could undermine the potential for growth and this led to another wave of selling frenzy.
Prospects for the second half of 2018
With the cryptocurrency market now in a depressed condition, prospects for the next few months could become more positive. Regulatory fears are beginning to ease and once we will have laws in place for cryptocurrency a new series of positive compounding effects could prevail.
Among them is a growing inflow from institutional investors. Financial companies had been standing on the sidelines thus far mainly due to lack of regulation and extreme volatility. If both issues are about to be solved, new institutional money could pour into the market, supporting the price of cryptocurrencies. Most likely, the current major coins are expected to be favored.
Investors who trade Bitcoin, Ethereum, and other major cryptocurrencies have a high chance of success, due to the already-established reputation of these coins.
Small companies are not excluded, though, especially if an innovative business model lies behind them. The second half of the last few years had been bullish for cryptocurrencies, and 2018 could follow on that path.
Risk warning and disclaimer
Cryptocurrency trading carries risk and might not be suitable for everyone. You should carefully consider before deciding to invest in cryptocurrencies. No information contained in this article should be regarded as an investment decision or advice.