Cryptocurrency Price Forecast: Trust Is Growing, But Prices Are Falling

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Trust Is Growing…

Before we get to this week’s cryptocurrency news, analysis, and our cryptocurrency price forecast, I want to share an experience from this past week. I was at home watching the NBA playoffs, trying to ignore the commercials, when a strange advertisement caught my eye.

It followed a tomato from its birth on the vine to its end on the dinner table (where it was served as a bolognese sauce), and a diamond from its dusty beginnings to when it sparkled atop an engagement ring.

The voiceover said: “This is a shipment passed 200 times, transparently tracked from port to port. This is the IBM blockchain.”

Let that sink in—IBM (NYSE:IBM) is spending titanic sums of money to advertise its blockchain during a nationally televised, prime-time NBA playoffs game.

That doesn’t come cheap.

According to Kantar Media, companies spent $208.0 million during the last five games of last year’s NBA playoffs. This is in part because each 30-second ad cost over $500,000. (Source: “Average cost of a Super Bowl ad increases over 10 yeara,” Kantar Media, January 18, 2018.)

So, you can imagine that IBM’s decision to advertise its blockchain didn’t come easily. It obviously trusts the idea of blockchain.

I see this trend everywhere.

American Express Company (NYSE:AXP). Bank of America Corp (NYSE:BAC). Walmart Inc (NYSE:WMT). Infosys Ltd (NYSE:INFY). Microsoft Corporation (NASDAQ:MSFT).

All of these titans are either working with blockchain or experimenting with different applications. I believe they, like IBM, will eventually embrace distributed solutions, even as they alter core “truths” about blockchain (more on that later).

This is what I mean by “trust is growing.”

…But Crypto Prices Are Falling

On the whole, cryptocurrencies are down since I last wrote about them. Ethereum fell to the $600.00-level, Ripple dropped to $0.63, and Bitcoin broke below $8,000.

The only positive thing is that it wasn’t a free fall. Crypto prices rallied on occasion, which suggests that the market is not yet entrenched in a bearish position. We could be one piece of good news away from a breakout.

Since I lack a crystal ball and have no way of telling when this trigger event will take place, I suggest extending our time horizon. Enterprise development of blockchain is incredibly promising.

I believe, and have believed for some time, that this commercial frontier is where blockchain will make its mark. It won’t be average folks using XRP to buy lunch at Subway. It’ll be mega-corporations sending money from Dubai to Hong Kong that will increase demand for cryptocurrency. It’ll be Big Business, in other words.

Cryptocurrencies will become a tool of commerce, just like most technological innovations, except that for once we (retail investors) can take part in its early success.

Some people disagree with me. The “Crypto Purists,” I call them. They consider Big Business the enemy, the very thing that blockchain must destroy, and here’s why.

Cryptocurrencies are like all markets: full of absurd myths and dogma. One of the most persistent fantasies is complete decentralization.

There is no such thing. You can never fully remove intermediaries.

I highlighted the word complete, though, because partial decentralization does exist. Of course it does. Companies could benefit greatly from moving their databases or supply chain onto a distributed ledger.

However, that doesn’t mean that zero centralization is feasible (or desirable). It is not. Just look at cryptocurrency exchanges if you doubt what I’m saying.

Exchanges Reveal a Weird Truth About Cryptos

If you’ve ever traded Ethereum or Ripple or Bitcoin, you’ve done so via an exchange like Coinbase or Kraken.

Now ask yourself: Are they decentralized?

The short answer is “NO.” These exchanges work like any other—they sit between buyers and sellers in order to facilitate a fair transaction. They are, in other words, the kind of middlemen that decentralization claims to be without.

“Aha!” cry the Crypto Purists. “We’re already solving that problem by making decentralized exchanges!”

Really? How could such a system be scaled to accommodate millions of transactions? I’ll give you the short answer: It can’t. Not unless you sacrifice security or cost-efficiency, two things that exchanges need to survive. Anyone who truly understands cryptocurrencies knows this as well as I do.

So, color me skeptical, dear reader.

Analyst Take

I don’t believe in the individualistic goals of cryptocurrency. I don’t believe that central banks will burn to the ground, or that the U.S. dollar will go up in smoke, but I do think that companies like IBM will start to quietly adopt blockchain applications. My money is on Big Business.

As such, our cryptocurrency price forecast sees the business-friendly tokens, like XRP and Ethereum, rising to $2.00 and $1,500, respectively.