Circle Research reflects on 2018 with an eye toward the future

Circle Research has released an in-depth 50-plus page crypto-market recap for 2018 covering network activity, market performance, ICO and Dapp trends, and more. The link to the full report will be available here.

One of the key takeaways is that even with the market downturn revealing just how early stage the technology and adoption still is, the disconnect between the headline prices and underlying activity and progress could lead to a maturation setup for 2019. "We wanted to get beyond the headline numbers and see what worked in 2018 and make informed observations about trends that started taking shape in 2018 and could further gain traction in 2019," said Ria Bhutoria, lead analyst at Circle Research.

Other highlights include:

  • Crypto Funding trends: While 2018 finished with $12.6B in ICO funding (according to TokenData), the pace of year over year monthly raises contracted through 2H18. The decline in ICOs prompted a return to traditional, private funding in crypto with crypto fund holdings gaining 50% Y/Y to ~$10B, and ~$5B invested in "Blockchain" companies (+~350% Y/Y). 
  • Fundamental activity: Although market prices for crypto assets dropped, activity didn’t drop as significantly and the underlying network improved in a few key ways as adoption for the Lightning Network grew and transaction fees dropped
  • 2019 trends to watch: Include the rise of stablecoins, growth in open finance ($~1.9m ETH locked in Open Finance and $38m borrowed in December), increased institutional adoption, new projects aimed at solving real problems, and an overall maturation of the industry

“Over the next year, expect to see strides made in addressing scalability, security, and interoperability challenges, improvements in user experience, and increase in institutional interest as institutional-grade infrastructure goes live, greater regulatory clarity, and experimentation with the tokenization of new and existing, tangible and intangible assets... we believe these are key trends that will shape much of the narrative in 2019 and lead to the maturation of the space," the report concluded.