Wired.com recently did a survey of 91 cryptocurrency hedge-fund managers. The average age was an astounding 26 years old.
There’s a lot of unwarranted hype around Bitcoin, Ethereum and other cryptocurrencies these days. A high volatility market that can easily see 10% gains or losses in a single day. Does the hype make sense? Perhaps. Is it a bubble that will burst at some point? Definitely. It’s just a question of when. And that when could be in two years from now or tomorrow. It will make a lot of people very rich along the way (and already has done). And when the crash happens, a bunch of people quite poor.
The current market cap of Bitcoin is $120 billion (120,000 million dollars). That’s a lot of money. But the market cap of the world’s biggest companies is a couple of times larger than that. Despite the potentially unwarranted hype we’ve seen so far. There’s potential for the market cap to become trillions of dollars. There’s plenty of money around the world that can still be poured into these currencies only helping the price rise.
How are the ICO hedge funds going to do?
To be honest most ICOs seem like a complete scam and many see this as a complete recipe for disaster. Investing in startups is risky. VC is risky. Most VCs aren’t good investments. The average angel investor loses money. But this is nothing compared to the ICO market. This is a real recipe for disaster.
The ICO market is changing rapidly. We’ve seen extravagant ICOs raise hundreds of millions of dollars in tiny amounts of time. Bancor raised $153 million in 3 hours for example. That’s a slightly misleading number since it took a lot of work to get there. 11 months of preparation. An estimated $300,000 in legal fees. Networking with the whales of the crypto industry and speaking at hundreds of events and building a community pre ICO. But nevertheless they raised a shit tonne of money very quickly.
If you’re looking to do an ICO nowadays it will cost you a good $500,000 at least to cover all these expenses. And a strong ICO may net you $15 million. The market has changed since the days of Bancor. It’s a rapidly evolving market and will continue to rapidly evolve. No one can keep up. In 3 months from now the market will look vastly different. We’ve seen the end of White Paper ICOs. You now need at least an MVP to even get started. And then a few hundred thousands of dollars on top of that to make your ICO work (and a good chance that after all that it still won’t work).
It’s an exciting market. In the long run, there may be great value from cryptocurrencies, but it’s still going to be a rollercoaster ride till we get there.