SmartUp: Another Crypto Bull Run Depends On Technological Breakthrough

To most of the crypto people, 2018 might be the year of “suffering” when Bitcoin price dropped over 80% from the historical high in late 2017 of $20,000.

SY Chan, Chief Investment Officer at SmartUp, told CoinsNetwork in an interview that Bitcoin price would be relatively stable, and this year will be the year of “BUILD” and “HODL (meaning holding)”.

Bitcoin price has also entered a horizontal range between $3,000 and $4,000 since the end of November last year. Technically, SY Chan believes that “the bottom has been tested several times, and $3,400 level would be stable.”

SY Chan, Chief Investment Officer at SmartUp

“In spite of negative news at the end of 2018, the price did not continue to dive.” Chan continued. However, whether the cryptocurrency market will commence another bull run depends on fundamentals, that is, whether technical problems such as scalability can be solved.

Although Bitcoin has been available since its creation back in 2008, its underlying technology – the blockchain, when being applied in areas like fin-tech, still faces different problems, such as transaction speed.

Among varied solutions, SY Chan has been paying more attention to the “Side-chain” which have continued to attract funds since last year. He pointed out that the solution hopes to improve the transaction speed and volume. If successful, cryptocurrencies can be easily commercialised, and their valuation would hence be raised.

SY Chan believes that the cryptocurrency should be tied with the real economy, where the amount of cryptocurrency being used as payment is the elemental factor driving the entire cryptocurrency market.

Chan said that when people start to trade in cryptocurrencies, with the volume transactions getting bigger and bigger, and a large-scale of commercialisation is to be seen, it will be the beginning of another bull market.

“This year, we have to wait for the technology development. Yet, there have been loads of inputs since last year, there may be some good news in 2019.”

Source: Jadeite Research

Many Initial Coin Offering (ICO) projects suffered a heavy blow in 2018. SY Chan said that the situation is similar to that of ordinary startups as successful projects have always been few and far between

“The remaining ICO projects in the market mainly focus on pushing commercialisation steps forward and building the underlying infrastructure,” he commented, “the big theme of this year is ‘Build’, while HODL is for investors.”

When it is currently a bearish crypto market, the Security Token Offering (STO) has gradually become the focus in the crypto space. SY Chan thinks that STO is not really about “cryptocurrency”, but is rather a different package of actual assets.

Therefore, in order to attract investors and thus create liquidity, Chan mentioned the importance of long-term commitment.

The traditional investment market has a mature ecosystem, including investors, due diligence and investor relations, etc. On the contrary, SY Chan believes that the STO industry lacks “one-stop service”, and mainly focuses on issuance services.

“I will help you to list and sell on the exchange. I just want to earn quick money. In fact, the situation is also similar to that of ICO. After the listing, I don’t care, because I can earn nothing.”

SY Chan continued, the mature market should allow investors to follow up their own investment. If there is no investor relationship, the secondary market liquidity is difficult to appear.

He said: “The mentality of this market is still based on making easy money… To act like real businesses, it really has to be done for a long time. If you only make easy money, the market would be very immature.”

J.P. Morgan, one of the largest US investment banks, announced in February that it would launch the blockchain-backed cryptocurrency “JPM Coin” in the coming months, making cross-border settlements for large international clients.

According to SY Chan, the investment bank has recognized the blockchain, and believes that JPM Coin can improve efficiency and reduce costs. Also, its move will help the market understand blockchain technology has its business value, thereby increasing confidence.

However, some people regard JPM Coin as a “direct threat” to the blockchain company Ripple as the latter has always wanted to act as a medium between banks, handling cross-border transactions.

SY Chan agrees to a certain extent that if J.P. Morgan takes the “Stablecoin route”, i.e. no value of speculation, and that JPM Coin can be commercialised, Ripple or other cryptocurrencies that are working on payment service will lose the investment value.

“Unless they work faster than JPMorgan in terms of commercialisation.”

SmartUp and Jadeite Research’s report can be download here.