As the price of one bitcoin rockets towards the unfathomable $20,000 mark, the hysteria surrounding cryptocurrencies is in full swing. Initial coin offerings (ICOs) are being pitched to venture capitalists and other investors at a rate of 70-80 per week, and a surprising number are getting funded to the tune of $743 million just in November alone, according to Coindesk. As of this month, there are now at least 230 ICOs (virtual coins or tokens sold to investors) with funding of $3.6 billion.

Amid the hue and cry, however, are some trends worth watching.

Some of them are good and some bad, but all of them are important. These were outlined quite well last month by a panel of industry experts at the FinTech Silicon Valley Investors and Founders panel discussion held in Palo Alto, California.

Venture funding disrupted

The first important development is that the venture capital community is getting disrupted. Startup companies who may not be able to receive funding through traditional means are increasingly turning to ICOs to raise money. Even Kickstarter itself recently declared it would not facilitate ICOs on its platform after Indiegogo announced plans to do exactly that.

“There were more ICOs in the first nine months of this year than there were Internet seed-funded companies,” said Duncan Davidson of Bullpen Capital.

“It’s becoming an alternative to funding through the venture community.”

Does this mean that the venture capital community will vaporize in 2018? Absolutely not. But whenever a major part of the tech world gets caught in the disruption crosshairs, attention must be paid.

The second important development involves the actions of the Securities and Exchange Commission (Sec), or more specifically the lack of any action by the agency chartered to both protect investors and facilitate capital formation.

Although there is growing unease surrounding the unregulated nature of ICOs and the feeling that they are indeed securities, the SEC has so far remained on the sideline. The agency did take action earlier this month against one ICO and SEC Chairman Jay Clayton issued warnings, but has done little else.

SEC could crush ICOs

Despite the lack of action, there is a belief among cryptocurrency experts that the SEC will either crush ICOs next year or at least issue some guidelines.

“What we need is clarity on what the rules of the game are,” said panelist Pierre Wolf of startup Tierion (which announced its own token), who told the gathering he had spent the past three weeks meeting with attorneys. “There are a lot of issues here.”

Looming over the debate is one inescapable fact on which the panelists agreed: the current ICO craze is a bubble. Most cryptocurrency experts believe that at least 80 to 90 percent of the current ICOs will not survive.

“Ninety-nine percent of the companies doing ICOs right now do not have a product at market,” Wolf said. “We have no idea of knowing if there is a product market fit. It’s not what’s happening now, it’s what happens after the bubble bursts that’s going to lead to a real impact.”

The irony surrounding the current cryptocurrency market is that bitcoin and other digital currencies were created to “democratize” the financial system, to take economic power from the large institutions and decentralize it.

When institutions such as Goldman Sachs begin futures trading in bitcoin, as it recently did this month, the process starts to look awfully familiar.

“It does seem ironic that the blockchain was meant to decentralize and fragment ownership, whereas ICOs are all about centralizing and consolidating ownership,” said Mike Bishop of Propy. “It would be curious if the cryptocurrency owners all end up being the establishment.”

It is the nature of Silicon Valley investors to take chances in areas of technology and markets that most fear to tread. The current craze surrounding ICOs is yet another chapter in that journey. “In 1997, if you bought 10 or 15 [initial public offerings] at $10,000 each and one of them happened to be Amazon, you would be worth $8 million today and you would have lost $90,000 on the other ten,” Davidson explained. “That’s probably a pretty good bet.”