- Post-ICO Market Consolidation: The explosive growth from ICOs in 2017 had led to a significant spike in prices, but by mid-2018, the market was consolidating. The ICO hype had created a short-term bubble, but as regulation and market corrections set in, the prices of many cryptocurrencies started to decline.
- Shift in Market Composition: The market had evolved from being dominated by just Bitcoin (BTC) to a more diversified landscape with numerous tokens and coins. Bitcoin regained its dominance, rising to nearly 50% of the total market capitalization after tokens, which had previously surged in the ICO rush, lost value significantly.
- Token Value Drop: Many tokens that were once heavily inflated in value during the ICO boom suffered larger losses than leading coins like BTC or ETH. These “dead tokens” or “shit tokens” became marginalized, and only a few strong tokens continued to have substantial value.
- OTC (Over-the-Counter) Markets: The report noted that OTC markets played a significant role in providing liquidity to the crypto market, particularly through the grey market. In these markets, large institutional traders and crypto-whales could exchange large volumes of crypto assets without the transparency and regulation of public exchanges. This segment saw billions of dollars being moved, although it was subject to legal and financial risks.
- Need for Crypto ETFs: A critical element for the market’s recovery and future growth was the approval of crypto-based exchange-traded funds (ETFs). This would channel institutional investment into the crypto market, bringing liquidity, regulatory oversight, and mainstream adoption. The SEC’s decision on Bitcoin ETFs was highly anticipated in 2018, but delays in approval added to market uncertainty.
- Regulatory Pressure: The tightening of regulations, particularly with the EU’s 5AMLD directive, was seen as necessary to address money laundering concerns and to bring legitimacy to the crypto space. However, this regulatory landscape could provide the stability required for the market to move toward more sustainable growth.
- Future Outlook: While the market was in a correction phase, the report remained cautiously optimistic, noting that institutional involvement through ETFs could lead to a more regulated and integrated crypto market. This could trigger a cycle of further growth, increasing acceptance within the financial industry.
In summary, the market was transitioning from a speculative ICO-driven frenzy to a more mature, regulated environment, with the potential for future institutional involvement and mainstream acceptance.