Following heightened enforcement action by the US Securities and Exchange Commission and other watchdogs who have been investigating into shady crypto’s enterprises, market participants report that they are more likely to invest in the area.
Nearly 60% of the 564 participants stated they believed the recent wave of legal cases in the cryptocurrency field was a positive indication for the asset class, whose notorious volatility has recently all but vanished. The SEC’s investigation of Yuga Labs, the company that created the nonfungible tokens (NFTs) known as the Bored Ape collection, as well as the US regulatory investigations against the defunct cryptocurrency businesses Celsius Network and Three Arrows Capital are notable interventions.
According to Chris Gaffney, head of world markets at TIAA Bank, if bitcoin is more regulated, more seasoned investors will be able to invest in it since you need a regulated investment opportunity. The more cryptocurrency can be incorporated into traditional investing, the better off it will be.
With bitcoin, the same is true. When asked about cryptocurrencies in July, the vast majority of investors showed noticeably more optimism. Over half of respondents now think that the world’s largest cryptocurrency by market value will trade between $17,600 and $25,000 until the end of this year, contrary to the majority’s earlier belief that it was more likely to first fall to $10,000 than to rise to $30,000 this summer. Fair enough, respondents this time had more options to choose from than they had in the previous survey.
In an interview with Bloomberg TV, Uniswap Labs COO Mary-Catherine Lader said, their investors understood and the market recognised that the decentralised protocols offer specific advantages that not just can help crypto markets, but also traditional markets more generally.
Bitcoin’s price has dropped by over 60% so far this year, but it hasn’t been able to move significantly outside of the $18,171–$25,203 range since the last poll was conducted. Since the token’s all-time high of almost $69,000 on November 10, the T3 Bitcoin Volatility Index has fallen 33%, showing that volatility has also significantly diminished. On Monday at 8 a.m. New York time, the cost of bitcoin was over 19,400.
Since March, Bitcoin has continued to exhibit a strong correlation with both the S&P 500 and risk-on assets. Due to the climate of rising interest rates over the last three months, investors have generally regarded cryptocurrencies the same as traditional assets. In contrast, 42% of respondents projected that the correlation between cryptocurrencies and tech stocks will remain stable, while only 43% said they will increase their exposure to digital assets over the next 12 months.
A challenging year
With upheaval dominating in the first half of the year, cryptocurrency in 2022 has been a tale of two halves. There were other bankruptcies, including Voyager Digital Ltd.’s and the $40 billion devastation of the Terra blockchain ecosystem. The sector’s record set in late 2021 had approximately $2 trillion in value removed from it. In June, things started to shift as the macroeconomic environment in general deteriorated and traders started to look to more traditional assets like Treasuries and FX for profits, forcing cryptocurrency to plateau to its current range-bound position.
Katie Stockton, managing partner of Fairlead Strategies, says that the lower volatility is “likely regarding the out there indecision.”
One estimate states that the Merge, a big network update for the Ethereum network that was finished in September, will reduce the blockchain’s energy consumption by about 99%. Even said, a relatively constant one-third of investors said they believed the so-called “Flippening,” in which Ether’s market value surpasses that of Bitcoin, may take place within the next two years.
The vast range of opinions on cryptocurrencies that poll respondents stated also serves as a reminder that the topic is still debatable despite the industry’s relative popularity among traders. When asked to select one word to describe the region, “future” and “ponzi” were the two most often offered answers.
According to Victoria Greene of G Squared Private Wealth, if you believe, you will continue to believe whatever the expense or the challenges. The boom-bust dichotomy of cryptocurrencies properly captures the wide range of possible outcomes. She listed a number of the many unresolved questions as regulation, platforms, what the hell it really is, and what it would be used for. Therefore, you would say that if you genuinely believe that to be the future. She said that people with more conventional ideas could describe it as a Ponzi scheme.
