Five predictions for digital currencies in 2018

Here are five predictions for digital currencies, based on those interviews:

1. More institutions will get into cryptocurrencies.

The number of institutional-level investment products related to bitcoin is increasing.

In addition to the CME and Cboe bitcoin futures that launched in December, Cantor Fitzgerald and Nasdaq are planning their own derivatives products. Analysts also expect regulators will approve a bitcoin exchange-traded fund in the second half of this year, or in early 2019.

2. There will be more regulation

However, in the meantime, regulators will likely try to limit speculation in cryptocurrencies.

One of the things we’ll see [is] enforcement here from the regulators,” Michael Graham, a Canaccord Genuity analyst who has published several reports on digital currencies said recently. He expects that greater regulation will cause a “major price dislocation event for the whole sector.”

3. It will be a wild, volatile ride.

Ari Paul, chief investment officer of cryptocurrency investment firm BlockTower Capital, predicts that bitcoin will trade at both $4,000 and $30,000 at some point in 2018.

One reason some analysts say bitcoin will ultimately rise further is that investors will bet on a payout from more splits in the digital currency.

“We think we’re going to have more forks in 2018 than 2017,” Canaccord’s Graham said. “Ultimately we think those forks are going to be a short-term tail wind to bitcoin’s value and a long-term headwind”

4. Bitcoin will prevail, while other cryptocurrencies grow.

Erik Voorhees, CEO of digital asset exchange ShapeShift, said that in contrast to bitcoin’s dominance on the platform a year ago, about half of transactions on the platform now don’t involve the popular digital currency at all.

However, bitcoin should still benefit from the increased interest in the “alt-coins.” Analysts also point out that since bitcoin is the most established digital currency, it is often the way new investors access the cryptocurrency space.

5. Stock investors may get a chance to invest in a digital currency-related IPO.

“I do think the public is going to see some crypto-owned IPOs this year and more broadly blockchain IPOs,” Canaccord’s Graham said. He said cryptocurrency-related companies that want to give U.S. regulators a better impression are likely “going to rely on old-fashioned equity.”

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