3 Reasons Why Crypto Will Come Back After Crypto Winter

It’s no secret that the crypto industry is going through a tough time right now with its market cap losing 2 trillion US dollars since November 2021.

But while it will take time, recovering the crypto will tell a much fuller story. Here are three reasons why the crypto industry won’t go away anytime soon and survive this Crypto Winter.

  1. Crypto is increasingly useful

The cryptocurrency market is poised to rebound as digital assets have clear, long-term benefits. Crypto companies are working diligently to provide more transparent and efficient financial services that have real purpose, such as affordable remittances, instant settlements, and more efficient cross-border payments. Cryptography is also beneficial from a verification perspective. Considerable sums are spent by traditional financial institutions on third-party auditors to ensure that all claims are on the books. Since cryptocurrencies are built on secure and immutable blockchains, they facilitate more secure forms of payment 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 popular adoption of blockchain technology, as detailed in the latest report from Chainalysis global crypto adoption indexmainly for remittances and as a hedge against weak currencies.

While there were serious doubts about the scalability of blockchains in previous bear markets, recent advancements in layer 2, zero-knowledge transactions and the evolution of decentralized finance and its many instances of use prove that it is only a matter of time before crypto becomes mainstream and is adopted globally. This adoption starts with financial use cases for the B2B sector and better peer-to-peer transactions and extends to innovative NFT-powered interactions like Decentraland’s metaverse.

Crypto’s vision for solving the many problems of modern banking while building a more inclusive financial system is here to stay, and there’s good reason the ultimate answer combines a mix of traditional and new players.

  1. Institutional investors are digging

Institutional investors have taken note of the potential of crypto and they want more. With big names like BlackRock and Coinbase teaming up to expand access to crypto assets for their institutional investors, it’s clear that this asset class has real influence and autonomy. Global Macro Hedge Fund Company Brevan Howard has raised over $1 billion for its flagship crypto vehicle. Even JPMorgan offered its wealth management clients access to six crypto fundswhich is particularly notable given CEO Jamie Dimon’s reputation as a crypto skeptic and critic.

Recently, Charles Schwab, Citadel Securities, and Fidelity Digital Assets announced the launch of crypto exchange EDX Markets, the latest indication of traditional financial giants marking their presence in the world of digital assets. Additionally, there are rumors that loyalty may soon allow its 34 million retail investors to buy Bitcoin through its brokerage.

There is nothing wrong with being wrong, and these steps will help pave the way for more players to realize that despite being in its infancy, cryptocurrency still has an innovative way for consumers to diversify their investments. As more types of traditional financial products – such as options, derivatives, and non-deliverable futures – are applied to cryptocurrencies, the capacity of the digital asset market will continue to grow. These same products will first be used by professionals with the obvious added value of removing counterparty risk while ensuring smooth settlement processes and a clear valuation framework.

  1. Crypto is regulated, not banned, by the authorities that matter

Serious players in the ecosystem are willing to adhere to compliance and regulation, in part because it will unlock the potential for more mainstream adoption and also help keep bad actors out of the space.

The European Union recently drafted and approved the Crypto Asset Markets (MiCA) Legislation, a critical new set of cryptocurrency regulations set to come into effect in 2024. This landmark legislation, combined with the expansion of fight against money laundering laws, positions the EU as the most robust and thoughtful crypto regulator in the world.

In the United States, the regulatory framework is slow to develop, but the implementation of the bipartisan Responsible Financial Innovation Act sponsored by Senators Cynthia Lummis and Kirsten Gillibrand is a step in a promising direction. The Securities and Exchange Commission and the Commodity Futures Trading Commission are still arguing over 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 blockchains and investors looking to buy more digital assets.

The UK plans to approve stablecoin regulations for payment purposes in the near future, which would add some effective clarity to UK-based crypto companies and consumers. Singapore is another regional hub that established itself early on as a safe place for innovation in digital assets, although the country is expected to introduce stricter regulatory measures for retail investors in the future.

Due to the borderless nature of digital assets, countries choose not to ban crypto and put in place regulatory safeguards to protect investors, while ensuring fertile ground for innovation.

It may take some time, but sensible regulation will greatly benefit market participants by targeting cryptocurrency-based crime, bringing more stability to the market, and solving the technical complexities of securing and transacting. digital assets.

Final Thoughts

Cryptocurrency – and the blockchain technology that underpins the industry – is going through its own moment of refinement. Events like the Terra UST/Luna collapse shook the ecosystem. He highlighted the need for regulations and the importance of creating products that provide real value to the community. As institutions affirm the role of digital assets in the broader financial ecosystem, as regulators lay the groundwork for safer and broader 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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