It is no secret that the cryptocurrency industry is currently going through a rough phase with losing its market value 2 trillion US dollars Since November 2021.
But while it will take some time, cryptocurrency recovery will tell a more complete story. Here are three reasons why the cryptocurrency industry is not going away anytime soon and will survive this crypto winter.
- Encryption is increasingly useful
The cryptocurrency market is preparing for a bounce because digital assets have clear and long-term benefits. Cryptocurrency companies are working hard to provide more transparent and efficient financial services that have real benefits, such as affordable transfers, instant settlements, and more efficient cross-border payments. Encryption is useful from a verification perspective as well. Huge amounts of money are spent by traditional financial institutions on external auditors to ensure that all claims are on the books. Since cryptocurrencies are built on a secure and immutable blockchain, they facilitate more secure payment methods as there is no central point of failure, and all transactions are visible on the blockchain.
Emerging markets, in particular, are taking the lead in grassroots adoption of blockchain technology, as detailed in the latest issue of Chainalysis. Global Cryptographic Accreditation Indexmainly for remittances and as a hedge against weak currencies.
While there have been serious doubts about the scalability of the blockchain during previous bear markets, recent advances in the second layer, zero transactions, the evolution of decentralized finance and the numerous use cases prove that it is only a matter of time before encryption. It becomes mainstream and is universally adopted. This adoption starts with B2B financial use cases and better peer-to-peer transactions and continues all the way to innovative NFT-enabled interactions such as Decentraland’s Metaverse.
Crypto’s vision of solving many of the problems of modern banking while building a more inclusive financial system is here to stay, and there are good reasons why the ultimate answer will bring together traditional actors and new players.
- Institutional investors digging in
Institutional investors have noticed the potential of crypto and want more. With big names like BlackRock and Coinbase partnering to expand access to crypto assets for institutional investors, it’s clear that this asset class has real impact and unwavering strength. Global macro hedge fund company Brevan Howard has raised over $1 billion for its pioneering encrypted vehicle. Even JPMorgan gave its clients wealth management Access to six cipher boxeswhich is especially notable given CEO Jamie Dimon’s reputation as a The skeptic and critic of cryptography.
Recently, Charles Schwab, Citadel Securities, and Fidelity Digital Assets announced the launch of cryptocurrency exchange EDX Markets, the latest indication of traditional financial giants making their presence felt in the digital asset world. Furthermore, rumors are circulating about it devotion It may soon allow its 34 million retail investors to buy Bitcoin through its brokerage.
There is nothing wrong with being wrong, and these moves will help pave the way for more actors to realize that despite being in its infancy, cryptocurrency still offers an innovative way for consumers to diversify their investments. As more types of traditional financial products — such as options, derivatives, and non-deliverable futures contracts — are applied to cryptocurrencies, the market capacity for digital assets will continue to grow. These same products will first be used by professionals with clear added value to remove counterparty risk while ensuring smooth settlement processes and a clear valuation framework.
- Cryptocurrencies are regulated, not banned, by the relevant authorities
Serious actors in the ecosystem are willing to respect compliance and regulation, in part because it will unleash the potential of mainstream adoption and also help keep bad actors out of the field.
The European Union recently drafted and adopted the Markets in Crypto Assets Regulation (MiCA), an important new set of cryptocurrency regulations due to come into force in 2024. This landmark legislation, along with an expansion of the existing law Anti money laundering laws, positions the European Union as the world’s strongest and most thought-provoking crypto regulator.
In the United States, the regulatory framework is lagging behind in development, but the introduction of bipartisan Responsible Financial Innovation Act The sponsorship of Senators Cynthia Loomis and Kirsten Gillibrand is a step in a promising direction. The Securities and Exchange Commission and the Commodity Futures Trading Commission are still vying for jurisdiction to decide whether crypto assets should be defined as securities or commodities. But at the end of these disputes, there will be clear regulations to guide companies built on blockchain, and investors looking to buy more digital assets.
The UK plans to approve stable currency regulation for payment purposes in the near future, which will add some effective clarity to UK crypto companies and consumers. Singapore is another regional hub that has established itself early on as a safe place for digital asset innovation, although the country is expected to introduce tougher regulatory measures for retail investors in the future.
Due to the borderless nature of digital assets, countries choose not to ban cryptocurrencies and instead implement regulatory safeguards to protect investors, while ensuring fertile ground for innovation.
It may take some time, but reasonable regulation will greatly benefit market participants by targeting crypto-based crime, instilling more stability in the market, and addressing the technical complexities of securing and handling digital assets.
Cryptocurrency — and the blockchain technology that underpins the industry — is having its own refining moment. Events such as the collapse of Terra UST/Luna have shaken the ecosystem. He highlighted the need for regulations and the importance of building products that bring real value to society. With institutions emphasizing the role of digital assets in the broader financial ecosystem, and regulators laying the first stones for a more secure and widespread use of crypto and blockchain technology, there is no doubt that the crypto world will recover stronger than ever after this bear. The market ends.
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