Quarter-End Insights

What's Next for Crypto Assets?

Evan Morris
  • We see further implementation of various decentralized business models that have taken advantage of the relative ease of raising capital via non-dilutive token sales (ICOs), which attracted over $4 billion in 2017. These token sales have displaced venture capital as the primary funding source of early-stage blockchain projects, which in comparison raised a little less than $1 billion year to date through mid-December.
  • In November and December, widespread coverage in the financial press caused a significant runup in prices for those tokens listed on the more retail-friendly U.S. Exchanges such as Coinbase. However, given continued positive price action, coupled with the emergence of over 1,000 unique crypto, we anticipate many new market participants to recycle gains into more esoteric tokens. Increased media coverage--as well as access to Bitcoin (BTC) and Ethereum via traditional brokerage providers, futures markets, and other access ramps such as proposed ETFs--will also drive further public consciousness of the technology in 2018.
  • We anticipate Institutional-grade investment funds to proliferate further in the first quarter of 2018 and take various forms, including ICO funds, blockchain-focused VC funds, and crypto hedge funds. This represents a unique evolution of crypto assets; unlike other types of investments, interest from retail investors preceded the entrance of institutional players.