The explosive growth of ICOs in 2017 showed that ordinary users, professional investors, and investment funds are all interested in digital currencies and blockchain-based projects. The market attracts new players with much higher profitability compared to traditional venture investments.
Bitcoin’s and Ethereum’s shares in the total capitalization of cryptocurrencies have already reached 40% and 18% respectively. In total, these two flagship cryptocurrencies comprise about 60% of the market. They directly affect the entire industry and vice versa — positive market trends and analytical forecasts always raise the price of Bitcoin and Ethereum.
High profitability of cryptocurrency assets vs. venture investments is mainly caused by high market volatility which, however, implies serious risks. This is why leading cryptocurrencies with the largest capitalization are considered the most attractive — they are more stable and reliable than those with lower ratings. Profit from such investments is predictable and the cryptocurrencies themselves are very liquid — unlike many altcoins with volatile prices and unsteady trends caused by massive one-time sales.
Investors are becoming more and more interested in cryptocurrencies
Investments in highly profitable ICOs have become more complex than lucrative investments in developing cryptocurrencies. This tendency is caused by the high percentage of fraud ICOs and ever-growing competition among projects which reduces the number of successful ones. According to the actual unbiased statistics, today most ICOs are not profitable, and investors are forced to seek their fortune in cryptocurrencies.
By the end of 2017, only two percent of all ICOs that successfully raised capital managed to fully implement the products described in their whitepapers. Such tendency has led to more sceptical attitude and more stringent selection criteria regarding ICOs. Founders, in turn, have increased their marketing budgets. As a result, most new tokens demonstrate much worse profitability and investors are turning their attention to cryptocurrencies.
In fact, there are only two investment options. The first option is to buy new affordable cryptocurrencies with low capitalization in the hope that their price will grow by orders of magnitude and thus will maximize the initial investments. The second option is to buy stable and popular cryptocurrencies like Bitcoin or Ethereum and rely upon their moderate, yet quite predictable, profitability. Presently, major cryptocurrencies are not expected to crash dramatically, but less popular cryptocurrencies are still at risk — their capitalization trends and future development remain vague.
Will Bitcoin and Ethereum be growing in 2018?
Despite many negative forecasts about Bitcoin from well-known analysts in the last two years, this cryptocurrency is still the undisputed leader by price and capitalization among several thousand competitors.
One the key trends that will significantly affect the growth of Bitcoin and Ethereum in 2018 is continued spreading of digital coins as a full-scale payment method among ordinary users. If the growth is supported by actual spreading and technological improvements rather than by various speculative schemes, Bitcoin and Ethereum may receive a double or even triple boost and above.
The important factor of further market development is the attitude of regulators towards prohibition or legalization of cryptocurrencies around the world. Today authorities in many jurisdictions are becoming more and more loyal to cryptocurrencies which is a really positive trend for traders.
Bitcoin’s chances to keep its leadership on the market will mainly depend on whether its development team finally reaches a consensus in resolving the key issues and disputes with this cryptocurrency, such as poor scalability.
If both developers and users of Bitcoin agree upon core principles and approaches, and at least part of the suggestions on how to improve scalability are implemented, then the cryptocurrency’s value will definitely get a boost. Currently it is mainly hindered by lots of alternative blockchains with much higher transaction throughput and lower fees compared to Bitcoin.
Yet another positive trend for Bitcoin’s price by the end of 2018 is that now it is hard for most disputers to criticize the first ever cryptocurrency and consider it a market bubble which may burst at any time. More and more large corporations recognize the importance of this industry and implement its functionality in their own business processes.
Such recognition and popularity are a clearly positive trend. Even despite multiple obstacles, nothing as of today may lead to dramatic drop of prices, and Bitcoin will probably remain one of the most reliable, yet promising, investment targets on this market.
Forecasts for Ethereum are mostly based on the fact that the second leading cryptocurrency is not a ready-to-use product like Bitcoin which is positioned to replace fiat currencies — instead, it is a platform for creating new blockchain-based projects. New developers and founders enter the industry with new attractive products having budgets in the range of dozens of million dollars. Most such projects are based on Vitalik Buterin’s blockchain. Their success is one of the key growth drivers for the price and for Ethereum itself.
The main argument of skeptics and critics against Bitcoin is that the cryptocurrency is not secured by anything — basically, it is a pioneer of the industry which technological capabilities are too powerful to play a role of “digital gold”. As for Ethereum, its value fully reflects actual demand for Ethereum’s services and platform among developers and consumers. As market demand for the platform increases, the price of the cryptocurrency will also be growing.
Investments in Bitcoin and Ethereum using TheIndex.Fund
TheIndex.Fund is an exchange investment fund which allows for investing not in one or several cryptocurrencies like Bitcoin or Ethereum, but in the synthetic index reflecting the current market conditions across various segments.
One of five investment indices on Zichain’s TheIndex.Fund is called Blue Coins — similar to Blue Chips on the stock market — and is based on the largest and most stable cryptocurrencies from the top of the total capitalization rating.
Investments in the index which reflects the current status of five top-performing cryptocurrencies at once will allow diversify your portfolio without investing in low-capitalization currencies. In addition, investments in the index make it much easier to track the portfolio status because you get a single quantitative indicator which represents the current value of all cryptocurrencies in the asset.
TheIndex.Fund offers not only Blue Coins for investments in the most reliable and large cryptocurrencies, but also lots of other investment strategies based on various selection criteria and sets of cryptocurrencies, such as platform affinity, positioning as a replacement for fiat currencies, and more. Each investor will be able to find an index which ideally fits their strategy along with the desired ratio of profitability and risks.