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From a price action perspective, bitcoin continues its fall, after briefly stabilizing around $4k. At some point in the past 24 hours, it touched another 2018 low, in the low $3k range. While ‘HODL’ers of last resort, basically super early investors who got in the last time the price was in the double digits or the low triple digits, continue to point to earlier instances when bitcoin saw such precipitous falls (notably in 2011 and 2014), they are missing the one big difference this time around. Bitcoin was not as much a part of the popular narrative on both these occasions, as it is now, which means that the reclamation of the upward trajectory could potentially be some time away, absent any highly unlikely deus ex machina! (It is worth pointing out that in terms of large scale ownership, there is still some ground to cover for bitcoin, with less than 25 million blockchain wallets globally as recently as June 2018. That numbers covers wallets for barely 3% of the global population)

What is also driving the downward momentum is reflexivity, a theory made popular by George Soros. This is basically the investor perception of the market environment, and the negative feedback loop that forms between perception and price. As is typical with such deeply bearish markets, some interesting theories are also floating around, some more plausible than the others. The most plausible one that we have heard is around a group of whales with large holdings who have decided to take some profits and do not mind moving the market price adversely with their large block offers.

Counterbalancing the bearish narrative is the interest from investors that missed out on the most recent run-up in 2017, and are waiting on the sidelines for the price to fall further. OTC folks are reporting seeing bids pile up around key inflection points on the downward price curve.

8 things we think we will see more of in 2019 –

1.A welcome focus on building for the long term – as companies (including Consensys) shut down parts of operations or pare back or let go of staff, it is definitely not a great time for crypto, especially after the heady days that lasted for around 6-8 quarters between 2016 and 2018. While it has been a spectacular fall from a price speculation perspective, the fundamental value of the blockchain – the core concept of disintermediation of trust – remains a powerful concept. Companies that can survive this winter and come out on the other side will be the next great wave of innovators, the next unicorns and decacorns. Now that the get-rich-quick scam that was the ICO 1.0 version has truly been buried, teams can now focus on getting back to basics and building products the old-fashioned way – by focusing on truly creating value

2. Corporations such as IBM, Microsoft, Google, Amazon etc, the usual suspects that have been primarily been dabbling on the fringes of the blockchain will now be in a great position. They will have talent flowing in to them from some of the failed projects, and they will also have the balance sheet and the scale to start new experiments or double down on already existing internal pilots. Hyperledger (from IBM) is something a number of companies are playing with, and Amazon recently announced its Quantum Ledger Database Service as well as other blockchain based tools for its Web Services business

3. Blockchain will become a foundational, infra layer protocol, similar to cloud computing or some of the networking protocols, with applications across industries. Finance and banking will be among the earliest to get disrupted, but in a decade or so, large swathes of the modern economy will be unrecognizable, compared to what they are today; distributed ledger technologies (DLTs) will drive process and product transformation

4. In perhaps a welcome development, a lot of the get-rich-quick crowd, the poseurs, the conference ninjas, and a lot of the riff-raff that characterized this bubble such as the ‘ICO advisor’, all these characters will now move on to fresher pastures. One hopes this also applies to some of the more eminent ‘investors’ in this space, especially the ones that shamelessly negotiated discounts during the pre-sale from ICO teams, and also negotiated exits on day one of listings on exchanges, where in cahoots with ‘market-makers’ the ICO token would be pumped to stratospheric heights and dumped on greedy, FOMO-ing retail investors, who ended up holding the can (not completely undeservingly, to be honest)

5. This will also bring a bit of humility back to the market, especially to a number of the most insufferable, grandstanding, self-proclaimed experts, economists, cryptographers, and other sundry crypto grandees ; Having a few zeros knocked off from the bank balance, real or notional, often tends to have that effect.

6. Infra continues to be built up with firms like Fidelity, Nasdaq, NYSE, ICE etc continuing to move ahead with their plans; Regulatory roadmaps are slowly forming shape across various jurisdictions.

7. Additionally, the sell-off has to be seen in the context of the broader risk-off trade across all markets; a global recession is most certainly looming, and most ‘risky’ asset classes, including bitcoin are likely going to be oversold

8. Family offices, private investors, as well as those folks that missed the earlier run-up are also poised on the side, ready to jump in as price continues to fall

In summary then, keep the faith folks! If as an investor you have been contemplating entering the market, it might be worth contemplating some nibbles, but it might be wise to temper expectations of overnight riches in crypto for a while.

Meanwhile in Crypto Wonderland….

“Crypto Startups Shutter as Market Tanks” ETCDEV, the startup that led development on Ethereum Classic, which is among the top 20 coins with a market capitalization of about $400 million, announced this week that it’s shuttering operations due to a funding crunch. Joseph Lubin’s ConsenSys, one of the largest crypto-related software startups based in New York, said Thursday that its workforce will be reduced by 13 percent as part of a reorganization.

“Gazprombank to Launch Crypto Services” Swiss bank Gazprombank recently partnered with Avaloq and Metaco to offer clients crypto services. Fintech company Avaloq and crypto custody solution specialist Metaco are reportedly collaborating with Gazprombank –– which has CHF 3.1 billion ($3.12 billion) in total assets under management ––“to implement their integrated crypto asset solution” aimed at banks and wealth managers.

“0x Launched Instant” 0x, an open protocol for decentralized peer-to-peer (P2P) exchange of Ethereum tokens today launched Instant. According to Will Warren, CEO of 0x, Instant is a “one-click buying interface built on top of 0x that gives developers and businesses a flexible, yet simple way to integrate token purchasing into any app or website”.

“Crypto Mom on ETFs”A commissioner of the United States Securities and Exchange Commission (SEC) said “not to hold your breath” waiting for a Bitcoin exchange-traded fund (ETF) at the Digital Asset Investment. Hester Peirce, dubbed “Crypto Mom” by the community for her dissent with the SEC’s decision to reject a Bitcoin ETF proposed by Cameron and Tyler Winklevoss, said that a crypto or Bitcoin ETF is “definitely possible,” but it could be years away.

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