At this point, we can probably safely say that we are in the middle of another crypto price boom that started roughly on April 1. The price of BTC has almost tripled since then, the price of ETH has more than doubled and many other crypto assets have followed suit. This article will not make any predictions but it may be interesting to consider the differences between the current boom and the latest other such a sustained one, namely the one in late 2017 — January 2018.

Lower public interest

The first interesting difference is that in contrast to 2017, the current boom has not been accompanied by anything remotely resembling the surge of worldwide interest. If we look at the Google Trends data, we will find that the interest is not even at the level immediately preceding the 2017 boom, if November 13, 2017 is taken as its starting point. For the current boom, I treat April 1 as its inception. [1]

Chart 1. Source: Google Trends

It is difficult to give a straightforward interpretation of this fact. Much depends on whether the surge in public interest in 2017 has at least partly fueled the boom back then or it was just a byproduct of it. If it was a major driver in 2017, this may suggest that the present boom is substantially different in its underlying mechanisms. However, it may also be the case that the underlying mechanisms are the same but the current boom is not as dramatic as in 2017 exactly because of the absence of a worldwide attention spike.

In any case, crypto price researchers, in particular, should take note.

No runaway price explosions this time

If we compare the histograms of price increases for 30 major crypto assets (20 native blockchain currencies and 10 application-specific ones) now and back in 2017, the first thing that stands out is the absence of explosive growth above 300% this time. During the previous sustained boom, projects like Tron (15,889%, not shown on the chart), Cardano (5309%), Stellar (3120%), Sia (2531%), Status (2477%), Ripple (1805%), etc. have seen their token prices skyrocket even compared to other crypto assets.

Chart 2. Source: Coinmarketcap

Chart 3. Source: Coinmarketcap

The caveat here is that the projects that underwent explosive growth in 2017 are much better known this time. However, there do not seem to be newer tokens skyrocketing at a similar speed this time around, either. This may be a sign of either a certain degree of maturation of crypto markets or that a surge of public interest is required for multiple major crypto assets to undergo explosive growth at the scale of the late 2017.

Lower growth rates for dubious projects

Among the major crypto assets, a number are associated with projects of rather dubious standing for various reasons. The 30 projects mentioned above include Ripple (centralized, no compelling use case for the token), Litecoin (a clone of BTC with no obvious use case), EOS (probably not even a blockchain), Tron (a centralized, one-man-cult project that plagiarized code), Stellar (same as Ripple) and IOTA (bordering on a scam).

It is somewhat encouraging that the tokens of all of those projects, except Litecoin, have so far grown slower than BTC and ETH. This may signify increasing maturation of crypto markets, although at this stage, it is too early to tell. The absence of 1000%+ price growth rates among major assets may also be pointing at the same conclusion.

On the other hand, there is still clearly some way to go as far as the quality of crypto markets is concerned. In addition to the continuing (if relatively slower) price growth for highly dubious projects, another line of evidence is the presence of blockchain projects of relatively high quality whose tokens have not grown almost at all since April 1. Among those are Tezos and Zilliqa.

The stagnation of application-specific assets

Looking at charts 2 and 3 above again, it appears that the native tokens of major blockchain projects have so far strongly outperformed the application-specific tokens, with the exception of BNB and LINK. This was not the case in 2017 if we disregard the massive outlier of TRX, which was then (as now) extremely aggressively marketed.

The most interesting question here is whether this relatively bearish attitude of market participants to projects like Golem, Augur, Omise Go, etc. reflects the genuine difficulties that they face, and if so how this pessimism about DApps squares with the major price rise for Ethereum which is supposed to power their scaled versions in the future.

One explanation here is that the future of ETH itself is fraught with less uncertainty than that of any particular DApp project or even the majority of current DApp projects taken together. In order to succeed, Ethereum does not necessarily have to cater to a huge variety of use cases, it suffices for it to power just a bunch of really popular DApps, and they can even not be there, yet.

On the other hand, an argument can also be made that DApps face less uncertainty than Ethereum because they can always switch to a different smart-contract blockchain platform, should it turn out to be more scalable and (or) advantageous than Ethereum in other ways. Ultimately, the significant divergence between the ETH and DApp token prices may also point at the need for further improvement in the quality of crypto market participants.

Is there something special about Chainlink?

Finally, the surprising thing about the current price boom is the identity of the fastest grower in the top 100, namely, Chainlink. It is the only crypto asset which is not a blockchain native token, crypto-exchange token or stablecoin in the top 30. As for the question to what extent this valuation is justified, it appears to be relatively reasonable compared to many other valuations. First, Chainlink is on track to becoming the most popular oracle provider to smart contracts, and it is blockchain-agnostic, having announced that it will be interoperable not just with Ethereum but also with Hedera Hashgraph and IOST.

However, the caveat here is that Chainlink has also recently partnered with Google on a project to make BigQuery data available to smart contracts. Thus, LINK’s massive price appreciation may be merely another case of crypto markets overreacting to vague news about interactions between blockchain projects and major companies.

[1] Naturally, figuring out a precise date for the start of a boom may be difficult in each case. However, for studying tendencies during the boom rather than its causal links directly, this does not appear critical, at least in the case at hand.