In the first six months of 2019, active development accelerated crypto industry growth and strengthened its influence on the entire global economy. The market capitalization of cryptocurrencies has reached $ 300 billion and continues to grow steadily. It also increased the interest of institutional investors in the digital industry and increased the share of institutional capital in the total capitalization of the cryptocurrency market. However, simultaneously with these processes, the initially free market causes investment companies to introduce more stringent regulation of the industry. This can lead to greater centralization of the cryptocurrency, which initially contradicts the very idea that led to the emergence of digital currencies.
Some of the world’s largest investment companies have already invested in cryptocurrencies, as well as such a large corporation as Facebook, having created its own cryptocurrency Libra. At its core, the Libra is a centralized coin and can easily be censored. Thanks to centralized cryptocurrencies, many non-Western banks will be able to access many services that they could not use before. At the same time, reports from various research companies show that, with an increase in injections of professional investment capital, at the same time, retail interest in major cryptocurrencies has declined.
Cryptofinancing Captures New Parallel Opportunities
According to Circle company research, thanks to some new crypto projects that have already raised from several million to several tens of millions of US dollars through venture capital investments, as well as attracting seed funding to their startups, which replaced the ICO, there has also been an increase in market share.
Despite the difficulties in classifying exchange tokens in order to regulate them, the impact of exchange tokens on crypto industry growth is significant. Unlike ICOs, exchange tokens are used only within the exchange platform itself to pay for various functions by users of the exchange, although the principle of distribution and the reason for their appearance remains the same – it is the sale of digital tokens to attract funds to the trading platform system.
According to research reports by crypto industry growth, due to institutional interest, it is determined by record volumes of CME futures trading. Due to the increase in the base value, the share of managed assets, compared to the first quarter of 2019, increased by more than 120% and the main players here are hedge funds. This is one of the significant indicators of interest in crypto assets of professional investment companies and increased institutionalization of the cryptocurrency market. Also, many experts believe that the interest in Bitcoin that investors have shown in recent months during traditional investments has significantly affected the volume of trade in these futures.
In addition, Facebook’s entry played a significant role in the cryptocurrency market capitalization indicator, as well as the interest of large professional investors in it, despite the fact that Libra cannot be fully called cryptocurrency due to some of its features mentioned above. In addition to the contribution of large companies to crypto industry growth, as well as to the institutionalization of the digital asset market, a large increase in the market capitalization of stable coins played a significant role in this.
As for decentralized applications, their activity of their appearance every month increased by several dozen. Based on the Bitcoin, Efirum and EOS networks, specialists continue to develop various platforms, increasing their functionality and expanding their areas of application in various sectors of the economy.
Many other factors in the global economy and politics that influenced crypto industry growth in the first half of 2019 were taken into account by Circle and displayed in a report on the company’s research. These factors include various regulatory innovations in different countries. For example, you can take a letter from the American IRS, in which the organization announced that cryptocurrency transactions, including investment and exchange transactions in cryptocurrency, are taxable. In many countries, cryptocurrency discussions have been held, leading to the emergence of new regulatory acts. The G7 countries are also showing great interest and are already discussing this topic at a high level.
The studies of various companies show us a significant crypto industry growth during the first half of 2019, as well as a huge number of cryptocurrency transactions over this period. Despite this state of affairs in the crypto industry, it still remains quite complex and uncertain for many. Even institutional investors with extensive experience in market operations and processes, those companies that are not inclined to take carefully calculated steps and who study the crypto industry in recent years, cannot make reliable predictions about how this market will develop in the future. At the same time, at this stage, most experts give a positive forecast for the development of the cryptocurrency market in the near future. However, they do not recommend rushing much with long-term actions and investing a large share of the total investment portfolio in cryptocurrencies. Always leave room for various consequences and diversify your investment.