The 2018 cryptocurrency market has rattled many of even the firmest proponents of digital assets. While we have seen the market for digital assets shed over 80 percent of its value, certain cryptocurrency companies have seen their valuation increase.

Can the valuations being placed on companies like Coinbase, Binance, and Kraken by savvy investors tell us something that the prices of digital assets can’t?

Yes, and here is why.

Despite all odds, it has been a good year for cryptocurrency exchanges. Coinbase was recently valued at $8 billion dollars in a recent $300 million capital raise and has booked $1.3 billion in revenues (including its losses on cryptocurrency investments!). Binance is on track to bring in $1 billion for 2018, and Kraken recently launched a private round with a valuation of $4 billion.

Altogether, we could estimate the valuation of these three cryptocurrencies at $20 billion.

Before we move forward, it’s also important to note that the caliber of investor that is participating in private equity raises far surpasses the retail investors that led the cryptocurrency rally in 2017. These are typically sophisticated, accredited investors, not cryptocurrency enthusiasts dreaming of striking it rich. The valuations assigned to these raises are the result of careful analysis of both earnings and market potential, not merely speculation. Therefore, we can conclude that, while even the best investors can get it wrong, these valuations reflect the relatively real worth of these companies and by extension the potential of the market.

What can this tell us about the cryptocurrency market? The current market cap of all cryptocurrencies is about $110 billion. This means that for $110 billion, you could buy all of the cryptocurrencies in the world.

But wait, how can three top cryptocurrency exchanges (among an easy hundred) be worth $20 billion if the entire market of the assets they service is only worth $110 Billion?

To put this in perspective, let’s look at conventional equity markets. The total value of all stocks in the world is around $70 trillion. The NYSE accounts for about $21.3 trillion of this capitalization, and ICE (the parent company of the NYSE) is valued at $44 billion.

ICE is worth twice as much as three top cryptocurrency exchanges, but the market of assets it addresses is worth 200 times the market cap of all cryptocurrencies.

The investors who are funding Coinbase are well aware of these facts. They know exactly what conventional stock exchanges are worth and how much revenue they generate. These investors are making a bold statement about the future of digital asset markets. They are saying these markets are real, they are coming, and they will be substantial.

The valuations being assigned to the cryptocurrency markets at large and the valuations of private companies are incompatible. If we examine the hundreds of legitimate cryptocurrency companies that currently exist and the activities of established companies that are developing products and services in the cryptocurrency sector, it becomes increasingly obvious that the valuation of all the major companies in the cryptocurrency sector is worth more than the entire cryptocurrency market itself.

In many ways, this is one of the strongest and clearest indicators we have about the future of digital assets. It suggests that there is little substance to the endless media stories suggesting this bear market signals the end of cryptocurrency. How could this be the end of cryptocurrencies if investors continue to value these companies at such robust valuations?

For Coinbase to have a future, the digital asset market must have a future, and for Coinbase to be counted among the most valuable startups means the future for digital assets is a bright one.

When the value of the broad market falls below the value of companies directly servicing that market, we have a clear case of market inefficiency and oversold conditions. While this doesn’t mean the market can’t go lower (markets are notoriously emotional and new markets inefficient), it does suggest that fundamental value is much higher. Either the swarms of private investors funding cryptocurrency infrastructure are wrong, or the broad market led by emotional retail investors is wrong.

Private valuations give us a much more reliable metric for what things are worth in the cryptocurrency sector than the market itself. The broad cryptocurrency market is an extremely nascent organism that lacks most of the tools that create a truly sophisticated market.

The cryptocurrency market is hampered by both the lack of infrastructure and a lack of true understanding. Most investors in cryptocurrencies do not understand the market or the technology, and this feeds the already emotional nature of markets and especially new markets.

What we can really learn from an $8 billion Coinbase is to ignore the current valuations of digital assets and to buckle down, as Amazon did in 2001. The current market does not reflect the real value and potential of the sector just as Amazon’s share price in 2001 was a poor predictor of what was to come. Companies and cryptocurrency investors will need to learn to survive the trough of disillusionment that has gripped the sector, and while it is difficult to say when these market conditions will end, it’s much easier to say that they will.