Following a price decline near the end of 2018, cryptocurrency prices remained in a depressed range for the rest of Q1 2019. Bitcoin dominance has been very stable and fluctuated between 50.1% and 53.5% of total market capitalization over the period. Dominance is an extremely important indicator of the crypto market in terms of risk-on appetite and market structuring. With such a small fluctuation it is evident that market participants are quite hesitant and unsure of what 2019 will bring.
The crypto market appears to be approaching a critical inflection point as the result of a quarter that has shown lower volatility and signs of stabilization. Low volume is a clear indication of lowered interest from new capital to enter the market. However, we have seen some signs of life over the last few months. The return dispersion among different crypto assets has grown as more distinctive factors start to drive individual project performance which is expected from a market that is less hype driven.
One prominent development in terms of technology utilization has been the growth of the decentralized finance (DeFi) industry that is currently built on the Ethereum platform as decentralized applications. DeFi provides users the ability to access financial and investment services in an automated and trustless manner. Such services include lending, asset exchange, and derivative products. These advancements have shown massive disruptive potential towards the traditional financial services industry due to massively reduced associated costs.
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Kind regards,
Hugo May and the Invictus Capital Team
