As I write this on a post-snowpocalyptic early January Friday here in NYC, the combined market cap of all cryptocurrencies is approaching $750B. When we began writing the XTRADE.IO white paper 6 months ago in July, the market cap was around $100B, and 12 months ago it was a mere $17B.
What does this mean?
There has been a tremendous explosion of crypto valuations in 2017. $1k invested in Ripple a year ago would yield close to $500,000 now. A drunk monkey with a dartboard would have made 10x from October unless he missed the Top-30 positions.
The reason for this is simple — very few people were aware of crypto. That changed in the fall, and we saw enormous retail inflows. Binance added millions of accounts in weeks. Massive amounts of small investors afraid to miss the boat flooded in after seeing exponential returns from nearly every asset. Coinbase briefly became the top app in the Apple app store. FOMO is driving the market. It seems we have reached peak hysteria. It seems that it must be time to sell!
Or is it?
Well, a major selloff took place in December and has already corrected up. Bitcoin “dropped” although it is still up more than 1500% on the year, and outflows into altcoins started balancing back as Coinbase confirmed “No Ripple listing”.
But overall, the market appears to be more resilient than naysayers have predicted — and worldwide adoption is still quite low, tenths of a percent. Just to get to the early adopter threshold of 2.5% of the population would entail a 10x rise from this point.
At this rate, a $1T market cap will be achievable shortly, likely by Q2 of 2018, if not earlier and retail will drive it.
But the true growth will have to be institutional.
There are around 150 crypto funds that were formed in 2017 and a projected 500 total to be created in 2018, chasing the enormous alpha of crypto returns. Major banks like Goldman Sachs have announced trading desk launches devoted to crypto and others will follow suit. The impediments to this process are quite basic — custody, fragmented liquidity across a patchwork of exchanges, fractured and basic order entry systems and in a word, a lack of basic standards.
XTRADE.IO will serve as an onramp to this institutional order flow by normalizing execution, market data, and inter-exchange liquidity. We are releasing several products in 2018, among them an API for all exchanges based on the widely accepted FIX protocol, a robust trading platform to represent market data and execution across the entire ecosystem, and an ability to trade at multiple exchanges with just one account by leveraging XTRADE’s internal liquidity pools at each exchange.
With institutional flow combined with retail, we can expect to see $2T in 2018 and $3–5T in 2019 and beyond. It will be a creation of wealth unsurpassed in human history, and we are privileged to witness it firsthand.
Democratize finance for all and witness the ingenuity of humankind.