What can we expect from the cryptomarket during 2018

The cryptocurrency market has had a banner year thanks to the meteoric rise in bitcoin prices and the huge popularity of initial coin offerings as a new way of fundraising.

Many people are buying into new digital tokens with the assumption that those virtual currencies will appreciate over time at levels similar to bitcoin, or its rival ether. And while price action has hardly been staid this year, market watchers told CNBC they expect more dramatic movements in the cryptocurrency market in 2018.

Companies, mostly start-ups, have raised at least $3 billion by issuing new digital tokens in 2017, resulting in more than 1,000 virtual currencies in existence today.

Commentators are largely predicting that companies will raise even more funds through digital token sales next year — only this time, bigger, more established companies could get in on the action.

"We are going to see the first of the real legit, large ICOs of existing established companies that are suddenly raising half a billion, or maybe even 5 billion (in funds)," Julian Hosp, co-founder and president of Singapore-based start-up TenX.

At the moment, participants in an ICO usually send either bitcoin or rival token ether to back a blockchain-based project. In exchange, they receive an entirely new virtual "coin" that has some sort of assigned worth and can be used to redeem a service offered by the company. Theoretically, companies can also give investors an equity stake — similar to an initial public offering — but most don't to avoid being subjected to stringent securities regulations.

But all of that could change next year, according to Hosp. "We are going to see the first sale of equity (through an ICO) and that's ... going to be a big, big, big slap in the face to many large investment banks," he said.

One of the ways that investment banks make money is by helping companies structure their securities before they are sold to investors.

The dramatic rise of digital token offerings saw the creation of hundreds of new virtual currencies, but experts say most of them have little to no value and some are outright examples of fraud. That's due to the relative ease in conducting a token offering and the few regulatory checks.

Hosp said he expects the cryptocurrency market to consolidate next year: "We are going to see the weaving out of a lot of cryptocurrencies in 2018," he said, adding, "People that are gambling on worthless companies, they are going to lose massively."

Source: Bloomberg Pro Terminal

Trader Bozhidar Arabadzhiev

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