Morgan Stanley, the multinational investment bank and financial services expert, has published their update about Bitcoin, and the future of digital currencies. The analysts have dived into the development of Bitcoin, the blockchain market, and crypto activity.
Here is our selection of Morgan Stanley’s main findings for you:
In 10 years Bitcoin has developed greatly. From a digital cash used by a few, Bitcoin became a new solution against the current centralized and opaque financial system, and a new tool for payment. From about 2015 we could see a surge of digital currencies expanding on the crypto market.
Bitcoin and other cryptocurrencies are now becoming the new institutional investment class. While on the darker side of things we saw serious hacks and losses, and some of the leading theories around Bitcoin failing. For example, it is much harder to achieve mass adoption in a worldwide trustless financial system, and there are cheaper institutionalized solutions for involving unbanked populations in the financial market.
Market and Liquidity
2018 has certainly proved to be an exciting year for Bitcoin- from sky-high prices at the start of the year we have come to falling trading volumes and prices. From the total cryptocurrency market capital, about 54% is still Bitcoin, while the other half of the market is spread in about 2000 coins and tokens. Bitcoin is traded in 52% with other cryptocurrencies, and 48% with fiat money. Bitcoin is showing similar changes in the market as Nasdaq did in 2000, while it is still unclear how its journey will end.
Stablecoins are growing in popularity on the market. These digital assets have their value pegged to a more stable asset, like US dollar (TrueUSD, Tether, USDC), gold (Digix gold coin), or formed by an algorithmic central bank (Basis). While the crypto market is highly volatile, stablecoins keep their value constant in changing conditions. Traders can use these crypto coins, to have value stabilized, without needing to make a more costly crypto-fiat exchange.
More and more institutional investors get involved in the crypto market- crypto assets under institutional management by July 2018 amounted up to $7.1 billion. The majority of the investments are arriving from the USA (50%). Hedge funds and venture capital are leading the field splitting 48 and 48 percent of the investments. While this is already an impressing investment sum, there are many more investors who are held back by the lack of regulation, secure technological solutions, and lack of financial institutions and asset managers invested.
The ICO failure
The legends of ICO investment opportunities with 1000% ROIs were spreading in the last few years on the market, but the reality is much less appealing. According to the analysis, only 36% of ICOs are active after their fundraising, 32% of them has already failed since the ICO, and another 32% failed at raising the required capital in their ICO. While even startups have a 25% failure rate within their first year of operation, blockchain ICOs are 64% likely to fail within the first year.
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