If you are a crypto trader, you are aware of what happened on January 7, 2018. That time, cryptocurrency market cap ended at US $820 billion. After thirty days, traders experienced a 65% drop in its market cap. There was a media frenzy declaring that Bitcoin is dead. With this, many new investors lost money selling Bitcoins. You have smart options if you did not panic and got carried away.
If you did not mind this, you just survived the sixth mass extinction of the crypto markets. It is understandable that you check your portfolio every five minutes if you hear such headlines. However, this is not the best strategy. This year, you have to consider trends and how to control the insights, which will significantly improve your strategy. Here are the crypto trends and how it can guide your investment strategy:
Invest in platforms
This year, investing in platforms is the most lucrative sector of digital assets. In 2017, you saw Ethereum rose from $8 in January to $1,400 in December. In a single year, it increased significantly because 70% of ICOs (Initial Coin Offerings) were launched on Ethereum. This trend will continue in 2018. As a result, the platform that facilitates ICOs will increase its value over time.
Platforms give infrastructure for teams to create applications. Since there are many projects launched on top of platforms, the value will be caught by the platform, not the application. With this, it is prudent to invest in platforms like Ethereum.
ICO craze will persist
ICO started in 2017 but despite its infancy, it delivered an increase of 3.5% more capital to blockchain startups. Without a doubt, the ICO model is an improvement from the traditional venture capital model. Investors consider ICO because of the increased liquidity. Venture capitalists invest in companies and their capital is locked up for five to ten years. ICO provide tokens and the sales will give the investors instant liquidity allowing them to move whenever they like. The smart options here are to watch for other ICOs on different platforms and study the ICO.
Lightning Network is leading
With higher fees and longer transaction confirmation, the scalability is a never-ending debate. You have to know that the most promising scaling solution today is the Lightning Network. Lightning Network will enable the transactions to be cheaper and can be confirmed instantly. It also increases the privacy because it utilises onion routing to obscure sender/receiver transactions. Currently, the issue is when it will be ready for mass adaptation. For now, it is running live on the Bitcoin network. Crypto that does not adopt the Lightning Network will lose its market share to Bitcoin.
Tokens are in
There are three types of tokens – payment tokens, utility tokens and security tokens. Payment tokens are utilised for making payments. While the utility tokens are used to purchase a service or access an application. Lastly, security tokens are used as a form to own assets like real estate, equities and many more. If security tokens are done right, it will remove the middlemen, making it more efficient.
Knowing these things, you can invest wisely. For more information and inspiration, you can consider smart options.