It may not be a shiny and bright summer for cryptocurrencies, with the major coin prices tumbling, but there are many reasons to remain positive. Cryptocurrencies are undeniably in a major ‘cold’ phase for the first time after 2018. However, many regulators and advisors are saying that this crypto winter is not necessarily a bad thing.
From a technological point of view, this could be the time for even more sustainable solutions. Bear markets signify the start of the building season. A new generation of innovators and ‘builders’ can surface. While crypto companies face the challenges of the market, they will have to buckle up and focus on more practical and efficient innovations. This will help create more utility.
In fact, BTC’s price fall opened up opportunities for investors to buy the dips. The Nasdaq-listed software company Microstrategy has bought the bitcoin dip again last week with $10 million purchase.
From a regulatory perspective this is the time to ‘separate the wheat from the chaff’, as Ravi Menon, Managing Director of the Monetary Authority of Singapore, said at a panel on the Future of Financial Services. Interestingly, the regulatory ‘normalization’ has been pretty fast-paced in the face of the downturn, re-establishing a wider faith in crypto rather than diminishing it.
Deputy Governor at Bank of England, Jon Cunliffe, compared the market crash to the dot com bubble in the 1990s at the Point Zero Forum in Zurich. He notes that “A lot of companies went, but the technology didn’t go away”, pointing to survivors such as Amazon. He further added, “So whatever happens over the next few months to crypto assets that people trade, I expect crypto technology and finance to continue.”
JP Morgan also mentioned, in a recent report, that the worst is over and the days are looking brighter ahead for cryptocurrencies in the future. They mentioned that this is because companies with healthier balance sheets are stepping in to stem market contagion. Another notable aspect is that the venture capital funding remains the same for the industry which means that investors haven’t lost faith in crypto products. If anything, this could be the time to build better.
After the ‘crypto winter’, an inevitable summer shall rise if we focus on the positive aspects of this downturn. As organisations come together to battle out the market blues, it becomes very clear that the bear market has allowed for the more useful technology to thrive in the future.