Cryptocurrency is undoubtedly one of the best technological innovations of this decade, maybe even the century. It came quietly to the unsuspecting world, but now it’s everywhere and impossible to ignore. Since its creation, cryptocurrency has been used for many things. It has powered digital universes, established the blockchain system, enabled free Bitcoin mining sites, and become an exciting alternative to regular money.

But beyond that, crypto has also significantly impacted the world of digital finance. It has influenced the way trends and forecasts are calculated. Why? Well, because, again, it’s impossible to ignore. But how has it done this? Read along to find out.

1. Crypto Is Volatile (and challenging to keep up with)

Crypto is one of the most volatile currencies out there. The prices can get unbelievably high in a minute and come crashing down before you can even say “crypto.” Let’s just say it may not be so suitable for a person with hypertension. To give you an idea of how volatile crypto is, consider the story of Laszlo Hanyecz, who traded 10,000 Bitcoins for two large pizzas. At that time, all his 10,000 Bitcoins were worth about $41, but fast-forward to today, they would have been worth $378.7 million.

This volatility has been a real ‘pain in the books’ for analysts and investors. Traditional financial systems for forecasting are built around stable fiat currencies. They were not built to handle anything like cryptos, which are everything but stable. The impact of this extreme volatility of cryptocurrencies has created a need for a more risk-assessing forecasting strategy. To handle something wild, you have to use something wild.

2. Buying Crypto Has Become a Trend (and even banks are buying)

Crypto used to be something nobody wanted to touch because it was basically useless and worthless. But somewhere, somehow, there seemed to be a DeFi revolution, and now the tables have turned. Crypto has become so valuable. Bitcoin is now the world’s most valuable currency, with one BTC worth over 60,000 dollars.
This new acceptance of Bitcoin as a legitimate asset has sparked a trend where everyone buys crypto. Regular people are buying; companies are buying; investors, hedge funds, and even banks are among the biggest crypto investors. Research by Blockdata has discovered that 55% of the 100 most prominent banks in the world (calculated by assets under their management) are investing directly or indirectly in crypto, or at least companies and projects related to digital currencies and blockchain.

3. Crypto Is Affecting Stock Valuation (good or bad?)

At this point, it’s no secret that crypto is big business. Thanks to heavy investment by many companies, the market caps of some cryptocurrencies and crypto projects totally outclass regular companies and their stocks. According to Statista, the market cap of Bitcoin as of Jan 2024 was about $824.39 billion. That’s way more than Tesla, which has a market cap of $645.37 billion.

With this new development, coupled with crypto’s volatility, it’s getting harder for analysts to value these digital assets and their impact on traditional stocks. Even with the traditional price-to-earnings (P/E) ratio and other conventional metrics, it’s still difficult to calculate the market cap of companies deeply involved in the cryptocurrency space. Whatever happens, financial forecasts must now consider the potential influence of crypto and crypto-related factors on the valuation of traditional stocks.

4. Blockchain Technology Is Getting Into Shares (and it’s for the best)

Blockchain technology is more than just cryptocurrency ATMs. There have been many interesting crypto technologies in recent years, but the most exciting thing is that crypto technological innovations are not limited to crypto projects. They are even spreading into the corporate world. One good example is in the area of something now known as “shareholder transparency.” Ownership transparency refers to revealing who owns and controls a company or other legal entities. It helps combat corruption, lower investment risk, and increase national and global governance.

Blockchain is helping to increase share “ownership transparency,” resulting in an improved architecture of share ownership everywhere. It is bringing a lot of development in how share ownership is tracked, not just in the initial stages but throughout the settlement cycle. This is not only improving “shareholder democracy” in listed companies but also doing so much good for their corporate governance and share markets. Let’s just say that it’s becoming a trend for companies to explore blockchain-based solutions for managing and recording shareholder information, including ownership transparency, to enhance transparency and reduce fraud.

5. ICOs Are Overtaking IPOs (even in non-crypto companies)

Before crypto took the world by storm, we used to have an Initial Public Offering (IPO), which is the process of offering shares of a private corporation to the public in a new stock issuance. Cut back to right now, and we have something called Initial Coin Offerings (ICOs), which you can say is the cryptocurrency industry’s equivalent of an IPO.

The rise of ICOs as a fundraising method for blockchain projects has challenged the traditional Initial Public Offering (IPO) landscape. The interesting thing is that companies are switching to ICOs, which allow them to raise funds by issuing digital tokens rather than traditional shares. A company like Telegram, which is not a crypto project, has one of the biggest ICOs ever.
This is becoming a trend in many companies. Still, the evolution from IPOs to ICOs also requires analysts to adapt their forecasting models to account for the unique risks and opportunities of ICOs.

Conclusion

No one can doubt that introducing crypto has influenced so many things. It has influenced how we save, invest, and deal with money. It has also introduced many different kinds of technologies into the world. We now have things like cryptocurrency ATMs and so much more. However, one of the biggest influences crypto has had is on forecasts and trends. Not only has it relegated many trends into the background, but it has also brought on many trends of its own. While all these developments are generally good and helpful, they may be giving forecasters and financial analysts nightmares because of the volatility of cryptocurrencies. But just like we have seen developments in other areas of crypto, we hope to see some improvements in how cryptocurrencies are forecasted