Even as speculation is rife that a potential cryptocurrency bubble could burst in 2018, there are several factors that make Blockchain experts see upside potential in the space. For Bitcoin, the most important cryptocurrency by estimation, experts see a 150 percent potential upside for 2018. Taking into account several factors, the cryptocurrency market's upside potential could rise to up to seven or eight times present levels, says Julian Hosp of Tenx, a Blockhain company.
Most studies state these 5 reasons that this year would transform the cryptocurrency landscape:
1. Work on Scaling Issues
Bitcoin is the most important cryptocurrency. Most government-backed money that goes in and out of crypto goes through bitcoin, so what happens to the original cryptocurrency affects the entire market.
The token's market dominance stood at about 40 percent as of Wednesday. It is estimated that bitcoin's market dominance should return to 75 percent of the entire space. It would not be a surprise if a 150 percent potential upside in bitcoin for 2018.
But it faces a challenge in scaling up for wider use. In the coming months, we will see a sharp uptick in transactions and the use of more bitcoin in these channels. In addition to this, the Lightning Network doesn't have any fee.
2. Large scale and more legitimate ICOs
Like last year, initial coin offerings (ICOs) will impact the ethereum network because ICOs usually require plenty of ether. That will support the demand for the platform's digital coin. More legitimate ICOs will lead to greater interest in ether as we are already seeing with the billion-dollar ICO of messaging app provider Telegram and that of Kodak.That means we could see a rise in the market cap of ethereum to $200 billion by the end of the year from less than $90 billion on Wednesday. The cryptocurrency's price could possibly double to $2,000.
Though other platforms could see similar gains, I believe ethereum will be the main focus.
Many believe regulations hurt markets, but that is a short-sighted perspective. In the long run, companies require rules for the sake of legal stability and certainty. Regulation gives users and institutional clients the confidence to invest.
Something similar happened when Japan started regulating bitcoin. The market dropped initially, but it rose eventually. Same repeated in Australia.
4. A lot of execution and usability
There are several start-ups that offer debit cards to help people spend their cryptocurrency holdings.
That means the number of users and merchants is set to increase sharply in 2018.
5. Institutional investors
The last reason why 2018 will be a stellar year for cryptocurrencies is that this will be the first year of solid institutional money flowing into the ecosystem.
It is estimated that $10 billion to $12 billion has so far flown into the crypto ecosystem, but that's nothing compared to what institutional funds could invest. Since those first funds propped up the market to around $500 billion, the next $10 billion to $12 billion, could double the market cap this year.