20 May What happened to the bitcoin Consensus 2018 rally?
The annual Consensus conference in New York City last week was supposed to bring a bitcoin and cryptocurrency rally according to Fundstrat’s Tom Lee and other analysts.
In his May 7, 2018 newsletter, based on previous charts during the week of and post-Consensus, Lee had noted a rise in values based on 10% and 69% jumps in bitcoin during previous conferences. Further, rises of 78% and 138% in bitcoin value in previous years in the two months following Consensus now seem unlikely.
In the previous two conferences, altcoins had performed even better, up 9% and 176% during the week of the conference and 78% and 552% in the two months post-Consensus.
Consensus came, coins crashed
Instead of gains there was a 10% or $40 billion decline in cryptocurrency market capitalization during the week. This despite 8,700 attendees, triple attendance of the previous year along with numerous big news announcements by institutional investors during the conference.
Companies making news during the conference included Nomura, Coinbase, CME Group, BitGo, Blockstack, Gemini, GoTenna, Amazon Web Services, Nokia and HTC.
What the heck happened?
Lee says despite progress on the institutional investors front, “two other elements are needed—first, a consensus on regulatory framework around crypto (from SEC and other entities, what is a security etc,) and second, broad cultural buy-in by institutions themselves (need to get past “blockchain not bitcoin”). Incrementally, regulatory uncertainty remains largely unchanged and marginal progress on the latter.”
ZCash was the only cryptocurrency to rally during the week based primarily on the news of its addition to the Gemini trading platform.
Lee said the dominance of bitcoin in conference presentations remained, despite being “boring.”
“Newer family offices/ seekers are looking for the next bitcoin, citing that bitcoin is “boring” and other protocols are better or faster. But bitcoin will likely be one of two primary on-ramps for major institutional trading (ETH being the other). Even in the payments space, it seems volume of payments using bitcoin is on the rise (Bitpay saw meaningful gains, and Square is seeing growth).”
Less excitement, more scrutiny
Fundstrat Digital Currency Analyst Alex Kern said “Attendees were more discerning and skeptical towards different projects. Investors wanted to know if and how Bitcoin and the broader crypto market moves to the next stage of growth. Key concerns included consumer adoption, custody solutions, and regulatory risk.”
Kern said with ticket prices near $3000, many companies opted to send only one or two delegates, there were fewer developers attending and enterprise blockchain seemed less conspicuous than last year. Some delegates said presentations were more like commercials than substantive discussions from other years.
Signs of progress, signs of concern
Fundstrat Data Scientist Sam Doctor found cryptocurrency exchanges are doing well with volumes up although the frantic growth is gone compared to December. He said institutional investors seemed most interested in custody, exchanges and investment vehicles.
Doctor heard more skepticism towards ICOs and many questions about the justification for tokens at all. He also noted concerns about which assets will be classified as securities and which will not.
Looking ahead, Fundstrat predicts the altcoins “purgatory” will last until somewhere between mid-August to mid-September before moving upwards.
At the moment it’s “Bitcoin Misery Index” remains in solid negative territory for most major coins where 0 is considered misery, 50 is considered neutral and 100 happiest. Bitcoin and Stellar were lowest with index scores of 30, Tron and Cardano at 32, Ripple at 35 and Neo at 36. Eos was the only digital coin above neutral at 55.
The analysts believe there will be a stronger upside potential for established blockchains such as bitcoin and Ethereum. Projected mid year and year-end 2018 prices: bitcoin – $20,000/$25,000; Ethereum – $1500/$1900; and NEO – $24/$30.
Recent history has proven how challenging it is to predict cryptocurrency market moves and only time will tell whether Fundstrat proves accurate in its projections.
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Editor’s note: Information on Blockcoin Today is not intended as investment advice. Please consult your own investment advisors for appropriate guidance and counsel.
Author: Jeff Domansky, Managing Editor
Visuals via Fundstrat