In the space of just a week, the market capitalization of the whole cryptocurrency market dropped from $184 billion to $138 billion. The $46 billion drop has led to the crypto market experiencing one of its worst weeks this year with a fall in market capitalization with some top cryptocurrencies losing up to 75% in value from their all-time highs.
Industry Still Growing In Spite of Market Value Drop
Popular cryptocurrency investor and CoinShares executive, Meltem Demirors, has stated that even though the cryptocurrency market has dropped a lot in value in recent times, the mainstream adoption of the crypto market and the whole ecosystem is still rising at an unprecedented, swift rate.
In recent months, ICO projects have experienced a loss in market value, after raising over $30 billion in the past two years. Several projects have no product to show for the capital raised for them by investors in spite of some projects having less than $10 million in daily volume and having valuations of hundreds of millions of dollars to billions of dollars.
The relevance of ICOs has been questioned, and more and more ICOs are finding it harder to raise capital. Binance CFO, Wei Zhou stated that it is beneficial for the long-term trend of the crypto market for investors to identify worthy projects and founders to raise capital. Demirors noted that;
“On the issuer side, many crypto projects that raised money through an ICO face massive challenges to stay relevant and create real purpose. This is what happens when you lack a true finance function, and unfortunately, ‘crypto finance’ is still nebulous and undefined on the whole. Just look at this balance sheet below, which characterizes many crypto firms that raised cash through token offerings.”
Crypto firms like Coinbase and Binance record market value of over $8 billion and the volume of digital assets exchanged has boomed in terms of profits, increased users and infrastructure. Binance has 10 million users in 180 different countries and its CFO, Wei Zhou stated that the goal of the exchange is to hit one billion users in the nearest future.
Current Situation of the Traditional Finance World
The existing financial world has also had its fair share of losses in 2018 as businesses like Blackrock, the world’s largest asset manager, experienced a withdrawal of more than $3.1 billion from clients and the stock market losing market value. Bespoke Investment Group co-founder Paul Hickey has explained that because of market conditions, investors are massively selling, and many are moving away from high risk, high return trades.
The fall in the U.S stock market value has seen tech giant, Apple, drop from 1 trillion dollars in value to about 817 billion dollars as at the time of writing. This drastic change is expected to affect the economies of countries like South Korea and Japan. The fall in the stock market is also having a negative impact on the crypto market.
Demirors said that there have been many market cycles experienced by funds and asset managers in the crypto world, and have survived every time, and 2018 would be no different from the past market corrections. As Binance CEO Changpeng Zhao and Coinbase CTO Balaji Srinivasan have stated that no matter the direction the crypto market is moving, individuals and firms will have to continue business.