The ICO performance is heavily influenced by the overall performance of the cryptocurrency market. The cryptocurrency market itself is influenced by many factors. One of the many factors is market sentiment, whether the overall market sentiment is bullish or bearish. Another big influencer are regulatory news. Events such as the Chinese ICO ban can create big pressures for the entire market. At the same time whales, which are large market actors with enough funds to move the market, are constantly trying to push the market into a certain direction.
Besides the many games that are played on the market there is one cornerstone that actually makes a difference: technical updates. Technical updates are the one thing that make blockchain technology better and are badly needed in order to pave the way for mainstream adoption. Technical updates in the past have managed to create momentum and significant price behavior.
Whenever there are changes to Bitcoin, the largest cryptocurrency, you can be sure that the price movement will impact other cryptocurrencies and the entire ICO market as well. In 2018 Bitcoin is still dominating the market for cryptocurrencies with a market share of more than 40%. Any news that will positively impact the price of Bitcoin will push the ICO market. Schnorr, which essentially is a digital signature scheme, is said to be the largest change in the code base of Bitcoin since SegWit. It will be the first change that will require a change of the Bitcoin consensus mechanism since SegWit. Schnorr could improve the efficiency of Bitcoin by 25% and provide for better user privacy.
The last major soft fork that occured for Bitcoin was SegWit. Despite the different nature of Schnorr and SegWit it is interesting to compare both soft forks.
SegWit entered into effect on August 24, 2017 when Bitcoin was at a price of 4,141 USD. It is worth to note the price behavior of Bitcoin before and after the SegWit release. The price of Bitcoin on May 24, 2017 was 2,321 USD. This represents a 78% price increase in the three months before the SegWit fork. Looking at the price of Bitcoin on November 24, 2017 which is three months after the SegWit release, we see Bitcoin trading at 8,210 USD. This represents a 98% price increase within only three months after the SegWit release.
The price performance of Bitcoin before and after the SegWit release was extraordinary strong. Of course there are many other factors that influence the price of Bitcoin and it is hard to isolate the impact of a single variable on the price performance of Bitcoin. However, it is likely that the SegWit soft fork had a positive impact on the strong price performance of Bitcoin in the second half of 2017.
Besides Bitcoin, Ethereum has achieved a dominant position in the market. Once a date for the Ethereum Casper release is announced, a rally for Ethereum could start which could positively impact the whole cryptocurrency market and ICO performances. Therefore it is important that ICO investors stay updated with major technical releases in the dominant cryptocurrencies Bitcoin and Ethereum.
The question that remains for ICO investors is whether the Schnorr update is a big enough deal that it will create positive price fantasies for Bitcoin investors. Once we get closer to the Schnorr release and a date is announced several Bitcoin investors might start to drive the price up again in anticipation of the positive effects of this technology. As the Bitcoin price recovers, the whole cryptocurrency market will get boosted due to Bitcoin’s dominance. This could bring a new golden area for ICOs.