Hey everyone, it’s Whatever Wednesdays again. Time for a short update on what’s happening the crypto space. Today let’s talk about “What’s Happening to Crypto?”

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What’s Happening to Crypto?

No one knows.

2018 was supposed to be “the year of Crypto”.

We were supposed to see Bitcoin go to $100k with institutional money coming in, ushering in the first trillion dollar market cap — perhaps even multi-trillions. Unicorns and rainbows and angels singing and all that.

None of those things have happened so far.

Wait… so is this the crash?

No… at least I don’t think so… at least not yet.

However, Vitalik Buterin (founder and current head honcho of Ethereum) seems to think we’re nearing the end:

Is anyone surprised? We're at the tail end of a crypto bubble.

— Vitalik Non-giver of Ether (@VitalikButerin) July 31, 2018

To be honest, I’m not sure we’ll see a bubble burst in the traditional sense anymore. I’ve long since believed that the majority of crypto is a bubble. However, nowadays I don’t think we’ll see quite the catastrophe that the doc com bubble was. Rather than a bubble “bursting”, I think we’ll see more of a slow leak. It will be more akin to a nail in a tire rather than popping a balloon. The reason for this is because we’re already seen a lot of boom and bust cycles. This has prevented a full-on bubble from forming like the dot com bubble.

I think a few different things will happen. One is that institutional money will come in, whether we like it or not. The continuous push for the creation of ETFs will bring in more institutional money, as well as more retail investors. I think something that people fail to understand is that the “market cap” of cryptocurrency, while currently stands around $270 billion, is significantly less than that.

What do you mean?

For example, let’s say the top 100 coins are worth around $225 billion in total. If the top 100 coins were all to be liquidated today, would you be able to get that $225 billion in value out? It would likely only be a fraction of that because of how thin the market is.

Once institutional money comes in, I think we’re going to be seeing a consolidation of cryptocurrencies. I think that sites like coinmarketcap will start excluding coins that don’t do at least $1 million in daily transactional volume on average. This exclusion from sites will be like a death knell for cryptocurrencies that will be dying off. This metric may also increase to $2 million or $5 million depending on how the marketcap (and volume) increases.

In this way, you probably won’t even notice when these coins disappear. They will die off slowly, like air bubble being lost from a nail in a tire.

However, I believe this will also strengthen the crypocurrency space as a whole. You can no longer afford to be a “pretender”, you must deliver a product or people will drop your coin and move elsewhere. The foreign concepts of fiduciary duty and accountability will resurface. People will no longer throw millions or billions of a dollars at a white paper and a promise. The “smart money” will migrate to coins with strong foundation and good development — that meet their roadmaps and deliver a good product. Can you imagine that?

Interesting… but when?

I think it’s already happening.

It’s just that it’s hard to notice from these general metrics like market cap. The real players in the background won’t show their cards until they already know what everyone else is holding. In this way, I will continue to do what I’ve been doing. I only have a little bit cryptocurrency in the coins I believe in — and I won’t be selling them. If there comes a time that my coins die off, then so be it, I made my gamble and I lost. However, if one of them does well, I’ll let it ride and see where it ends up.

There is an Amazon in there somewhere.

Just remember that cryptocurrency (like stock-picking) is just gambling. Only invest what you can afford to lose.

Bottom line?

In this game, I think you should only invest (gamble) in a few projects that you believe in.

Those that are day trading and swing trading — please realize that you are only krill in a sea of whales.

Be careful out there.

TL;DR

I’m leaning less toward a crypto bubble burst, and more toward a slow leak.

Bad projects will eventually die off… but we won’t know it until they’re already gone… and it’s happening already.

In this game, I think you should only invest (gamble) in a few projects that you believe in.

That said, only invest what you can afford to lose.

Those that are day trading and swing trading — please realize that you are only krill in a sea of whales. Be careful out there.

-Sensei

Agree? Disagree? Questions, Comments and Suggestions are welcome.

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