Sebastian Markowsky, a director at GP Bullhound, and main author of the report, explained that institutional investors are likely to come into the market and drive the price higher. More retail investors will get in to the market too, buying cryptocurrencies at elevated prices. As the market begins to see sharp falls later this year, it will exacerbate the selling causing "panic" and the eventual correction.
"Nonetheless, once this 'crypto-winter' passes, the growth dynamics for the precious few survivors will be unprecedented," Markowsky wrote in his report.
There are over 1,000 cryptocurrencies on the market with many new ones being created all the time. Bitcoin still remains the biggest by market capitalization, followed by ethereum and ripple. After hitting record highs at the end of last year, these cryptocurrencies suffered large falls in the first quarter of 2018, but have slowly started to recover.
The value and fate of cryptocurrencies has been fiercely debated over the past year. Noted economist Nouriel Roubini predicted that bitcoin would crash to zero. Warren Buffett has also struck a pessimistic note on cryptocurrencies.
"In terms of cryptocurrencies, generally, I can say with almost certainty that they will come to a bad ending," Buffett told CNBC in January.
Experts suggest that there are a number of factors that could drive prices higher this year, but admit the behavior of investors will ultimately still determine the price.
"We are going to see four factors at play this year — regulation, increasing interconnectedness of markets, more types and varieties of instruments and the arrival of institutional money. These add fuel to the fire as well as bringing efficiency to the playing field," Charlie Hayter, CEO of CryptoCompare, a data website for the industry, told CNBC by email on Wednesday.
"The industry has resiliency in terms of its infrastructure but is still subject to the whims of behavioral sentiment."