Crypto markets are fluctuating like mad and the future looks uncertain for bitcoin and altcoins. The recent correction has been dubbed the Bear Market and there are some signs that the downward trend may be coming to an end.
As you might expect, the cryptocurrency market is still going through a major transition. As the prices of most major cryptocurrencies and tokens have fallen, the demand for and the value of the last remaining top-tier cryptocurrencies have risen. Some believe that the total market cap of all cryptocurrencies will reach $1 trillion by the end of 2018, and others predict that some of the top-tier cryptocurrencies will see even higher valuations in the coming weeks, months, or even years.
After a volatile year of 2017, cryptocurrency demand is back on track and is poised to charge in 2018. One of the biggest factors contributing to a slew of positive news for the industry is the growing number of people who are getting in on the action.. Read more about cryptopotato and let us know what you think.
Because BlackRock is the world’s biggest asset manager, it raised some eyebrows when its CEO, Larry Fink, said recently that he was seeing “very little in terms of investor demand” for crypto and Bitcoin (BTC) based on “my past two weeks of business travel.”
Following one commentator’s assertion that BlackRock was merely preserving its heritage bond business, given that “Goldman Sachs, BNY Mellon, State Street, Morgan Stanley, all joined the sector in response to demand,” a heated Twitter debate ensued. In addition, BlackRock is the second-largest shareholder in MicroStrategy (MSTR), which many consider to be a pure Bitcoin play.
As previously reported, Bitcoin hit an all-time high of $64,000 on April 14 but quickly plummeted, and it, like many other cryptocurrencies, has been trading at about half its April high for weeks. It’s understandable that some users feel apprehensive.
Getting through market cycles
Perhaps it is preferable to have a longer-term perspective on current occurrences. “I’m not sure what to make of Fink’s remarks, save that they don’t match with our day-to-day experience,” Bitwise chief investment officer Matt Hougan told Cointelegraph.
“Institutional investors conduct due diligence in 12–36 months,” Jeff Dorman, chief investment officer of digital asset management company Arca, told Cointelegraph, adding, “They aren’t timing market cycles.” They’re attempting to gain confidence in the asset class in order to make a 10-year or longer commitment.”
“It’s essential to remember that the market is up more than 200 percent in the last year, making it the best-performing asset class in the world,” Hougan said, claiming that Bitwise is seeing consistent inflows.
Furthermore, since crypto and blockchain technology is a global phenomena, it is important to avoid making broad generalizations from occurrences in the United States or Europe. For the record, BlackRock is headquartered in New York City. Justin d’Anethan, director of exchange sales at Singapore-based EQONEX, told Cointelegraph: “It doesn’t seem like a crypto winter here in Asia.”
“While decreasing prices have tempered some of the excitement, we continue to see strong interest in crypto and crypto- and blockchain-based businesses. If anything, many people saw the standstill around the bottom 30,000s as a chance to get in.”
Hedge funds aren’t the only institutional players probing the crypto waters these days, according to Emin Gün Sirer, a Cornell University professor and creator of the Avalanche blockchain protocol, who recently told Cointelegraph China that hedge funds aren’t the only institutional players probing the crypto waters these days: “I’ve been receiving calls from retirement funds, […] much slower-moving but with maybe ten times more money under their control, and they’re slowly going into crypto.”
Also, according to Bloomberg, Fidelity Digital, an institutional pioneer in the crypto sector, has been actively growing recently, increasing personnel by 70% due to “high crypto demand,” including 100 new employees in Dublin, Boston, and Utah. The company is expanding its product offerings in response to increased demand from retirement advisers and businesses. “We’ve noticed an increase in interest in Ether, so we want to be ahead of the curve,” Jessop added. Megan Griffin, a spokeswoman for Fidelity Digital, told Cointelegraph:
“We haven’t observed a significant shift in [crypto] demand during the [post-April 14] downturn, given that institutions tend to have a long-term perspective and are used to managing through cycles,” says the analyst.
Dorman went on to say even more emphatically. “New investors’ interest in digital assets has increased, not slowed,” he added. “Any sluggishness in allocations is mainly due to the heat than to price.”
Is there a boom-and-bust cycle?
Nonetheless, there are legitimate grounds to believe that crypto demand is waning. In a June study, a JPMorgan analyst said, “There is no question that the boom and bust dynamics of the previous weeks constitute a setback to the institutional adoption of crypto markets, in particular Bitcoin and Ethereum.”
“Of sure, the crypto markets have been moving sideways,” Lex Sokolin, chief economist at ConsenSys, told Cointelegraph. “The causes are a mix of resistance to mining, global macro risk-off trends, and sentiment/meme trading momentum slowing.” But the basics are sound, according to Sokolin:
“Both crypto assets and crypto company stock are seeing a lot of interest from institutional investors. As recent proof, we can refer to FTX’s $18 billion valuation and Bullish’s $9 billion valuation, both of which were backed by some of the world’s biggest hedge funds.”
According to Hougan, the events that have transpired since the beginning of the summer have prompted some investors to pause down and do a little more study. The ban on Bitcoin mining in China, which came at a time when US officials seemed to be stepping up attempts to control cryptocurrency, caused investors to “stop and think.” The good news is that, even if they cause short-term volatility, both of these events are long-term benefits for the market.”
Nonetheless, the recent roller coaster ride serves as a warning that BTC and crypto in general have yet to overcome their volatility issue. “Volatility terrifies everyone,” Dorman said, adding that “volatility is more acceptable when you believe the value of the underlying asset – that’s the greatest barrier with institutional investors in terms of their education.”
Related: On the fence: How long can a cryptocurrency bear market last?
“New investors are much more interested in DeFi, gaming, and other cash-flow generating assets than they are in Bitcoin or Ethereum — or ETH competitors,” Dorman has noticed in recent months.
“Decentralized finance continues to develop and execute transactions and loans,” Sokolin said, adding that “major studios and creators are shifting to new tokenized business models on NFT-based platforms.” Ethereum and other computational networks are obviously having a moment. It’s also conceivable that additional DeFi-style activities will be linked to Bitcoin, Solana, or other chains, which would increase the overall pie.”
Taking a “long game” approach
Cryptocurrency, on the other hand, continues to encounter difficulties. “We expect to see significant new activity on the regulatory front in the United States, for example, and if regulators over-reach, that could have a material negative impact on crypto,” Hougan said, adding, “Of course, the flip side is also true: If regulators put forth balanced regulation, that would lay the groundwork for the next great crypto bull market.”
Many of crypto’s technical problems, such as scalability and transaction speed, have “already been looked at and partly resolved,” according to D’Anethan, but the proper balance between “network effect” and efficiency has to be found, as follows:
“BTC is a widely used cryptocurrency, but it does not provide the greatest user experience technologically. A new cryptocurrency may be fantastic, but it will be useless if no one uses it. This is still a self-balancing task to be completed.”
“We are in a multi-decade secular uptrend,” Dorman said, adding that long-term trends remain favorable. […] Every single near-term issue — regulation, China dispersion, etc. — is a long-term positive,” said Sokolin, who also mentioned a “deep investment in the digital asset long game by intelligent players that is occurring now.”
Bitcoin may have lost a good chunk of its value in the last few months, but the cryptocurrency world isn’t dead yet. With so many altcoins out there, investors are always looking for the next big thing…and many believe the next year will be the year that Bitcoin takes the big plunge.. Read more about bitcoin news and let us know what you think.
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