Anil Lulla is the co-founder and COO of Delphi Digital, a research firm dedicated to advancing the development of the crypto market.
In the past few months at least four crypto hedge funds have shuttered. Yet, there’s never been a better time for institutions to get involved in this sector.
Despite an unprecedented global pandemic wreaking havoc on just about every major economy on the planet, investors have made quite a lot of money in recent months in both traditional and crypto markets. When it comes to the latter, this is just the beginning for those with the discipline to seek out under-appreciated opportunities in this fast-paced industry.
The incoming bull market for crypto will look completely different than the last one. Mostly because there won’t be just one, but two different bull markets simultaneously playing out over the next 12-18 months.
One will involve the rotation of capital from zombie projects to protocols where the underlying product is actually being used and accruing value. Even without an influx of new capital or users, there is still too much money tied up in ghost protocols, many of which dominate today’s large-cap names.
After the last bull market, we were left with many projects with no real usage other than speculation. They were focused more on marketing efforts than actual product development.
Take XRP, for example. It is the king of worthless altcoins due to its ability to accrue very little to no value, even if adoption skyrockets. Even after the mid-March carnage, it still held a total market value north of $6 billion and currently trades close to $13 billion. Stellar’s native asset (XLM) is still in the top 15 at nearly $2 billion. NEO, another celebrated project in the ICO bull run that has yet to deliver, has a market cap of $1 billion.
There’s an important difference between the adoption – or “success” – of a certain protocol and the potential for value to accrue...