Near universal consensus exists among crypto analysts that a price recovery is underway, as fiat market caps continue to advance and other activity, such as transaction volume, is rapidly increasing. Not surprisingly, comparisons are being made to 2017, when market growth drove most platforms to all-time highs, and public interest in blockchain assets soared. Nevertheless, this second bull run is likely to be very different, as the crypto space, and interest in blockchain technology, has advanced significantly over the past two years.
One of the most notably differences is the change in the top platforms by market cap, which will almost certainly impact which receive the most investment. For example, Bitshares, Stratis, and Digibyte all had top ten market caps at one point, but now have fallen much lower. Others, such as EOS, and Stellar have seen their ranking advance. There is no guarantee that investors will ever return en masse to these once high-flying cryptos, even as the overall market improves.
In a similar context, the public is all but certain to use far more scrutiny when deciding which platforms are worthy of investment. One of the hallmarks of 2017 was a strong public willingness to put very large sums of fiat into virtually every platform, with little concern for long-term potential. This craze was best exemplified by the ICO boom that resulted in substantial losses for many naive investors. This time around platforms will be held to higher standards, and likely be subjected to more professional analysis as the crypto space now has far better metrics in which to examine specific blockchain assets.
Also, there is little doubt that this market recovery will involve vastly more fiat investment than in 2017. Only a tiny percentage of the investing public participated in the previous bull run, and institutional investors stayed away completely. Global interest in crypto is now much higher, particularly in the legacy financial space, which will almost certainly result in exponentially higher values for some platforms.
Despite the growing market optimism, those seeking to purchase cryptocurrencies would be wise to remember that blockchain development is still in its early stages. Although some platforms are destined for tremendous success, many more will fail. This fact is all but certain to be realized as the market rises and distributed ledger technology becomes a standard part of everyday life. Likewise, scams of all sorts are certain to increase, which can only be avoided by education and due diligence.
Although these are exciting times for crypto advocates, the one absolute truth of investing in this sector is that volatility is constant, and predicting the market is all but impossible. There are simply too many variables to this new asset class to fully grasp where the market may be headed. Thus, although it is reasonable to assume that a recovery is underway, one should not assume that it will be similar to the last one or that it will match any previous patterns.