3 Reasons the Cryptocurrency Market Is Destined for Outer-Orbit
July 6, 2018
Down nearly 70% from its all-time-high, the cryptocurrency market has investors worried.
Social media and conservative news outlets are riddled with talk of a “burst bubble”, spurred on by economists who have pitched in — explaining why another bull run akin to December 2017 will occur when pigs can fly.
As Fear, Uncertainty, and Doubt (FUD) reaches record levels, one would do well to step back, breathe deeply, and take a look at the cold, hard facts.
Here are three reasons the cryptocurrency market is destined for a bull run of interplanetary proportions within the next six months.
1. Institutional Sponsorship
While many believe telling their grandmothers to buy Bitcoin will pump prices, such actions are a proverbial drop in the ocean when compared to the monolithic investments made by institutions. Who else could pour six hundred billion dollars into the market in just two months? Looking at Q4 2017’s market capitalization, the plain truth of it points to institutional sponsorship — that is, the banks, the hedge funds, the venture capitalists.
While December’s bull run may have pushed cryptocurrency into the global spotlight, the market has since matured significantly. Now, dozens of the world’s largest financial institutions have set their sights on the emerging asset class — from investment, to trading, to actually pushing out cryptocurrencies themselves. Goldman Sachs, for one, will hone in on Bitcoin with its own dedicated trading desk, while Nasdaq — the world’s second largest stock exchange — will be using its technology to power a new cryptocurrency exchange.
The world’s largest financial institutions are now poised to enter the market — opening the floodgates to what will very likely be a multi-trillion dollar market cap.
Early adopters of cryptocurrency may shudder at the sight of the word, imagining cryptocurrency as a passing fad — a novel, short-lived concept that was stamped out by stubborn governments and insecure banks.
Yet, many confuse regulation and repression. For cryptocurrency to reach lofty, glorious, multi-trillion dollar heights, then it must be available to the masses. It may have already reached early adopters — peripheral members of the tech world and advocates of decentralization — but unless cryptocurrency plays by the book, it will never become a standardized asset class.
For cryptocurrencies to be incorporated into Exchange-Traded Funds (ETFs), for example, they would be effectively tapping into a $3.4 trillion dollar market — where even retirees would be able to painlessly invest into cryptocurrency using 401k or IRA retirement funds. While this is not yet the case, the US Securities and Exchange Commission has called for the public to voice their opinions on the notion of cryptocurrency ETFs.
Regulation is also the key to gaining approval from governments, who will fuel immense growth for the entire industry as they integrate cryptocurrency into mainstream usage.
IOTA — a Germany-based DAG-ledger (host to the cryptocurrency MIOTA) known for its robust regulatory compliance — has tasted the fruit of this labour, having signed a Memorandum of Understanding to work together with the United Nations.
3. Boom & Bust — Come Along for the Ride
Alongside the boom-bust cycles of the cryptocurrency market, comparisons with the dotcom bubble of the 90s cannot be avoided. Market expansion is met largely with triumph, and retracement — disdain, along with the fear that the entire thing will come crashing down, instantly vaporizing the hundreds of billions of dollars currently invested into cryptocurrency.
While the flow of the market may certainly drag investors along on an emotional rollercoaster ride, the fact remains that the cryptocurrency market — like any other market — works and grows in cycles.
Assuming one had the fortune to purchase Amazon shares in, say, 2014. While now one of the most profitable corporations in the world, things haven’t been a steady ride for Amazon. Inspecting Amazon’s market capitalization since 2014, we can see a number of hearty corrections — which presumably would be ample to shake the weak hands. For those who persisted, however, they would now be holding shares up 400% in profit, and counting.
As heart-wrenching a correction 2018’s bear-run may be, this is a typical market cycle — led by Bitcoin — who has been hailed as “digital gold” by dozen of the world’s most prolific investors and influencers, including Eric Schmidt (Google Executive Chairman), John McAfee (McAfee Antivirus Founder), Peter Thiel (Co-Founder of Paypal), and none other than a man who needs no introduction, Bill Gates.
There exists a patent divide between advocates of decentralization — who understand the usage cases for blockchains (and the cryptocurrencies that power them) — and new entrants to the cryptocurrency market.
The latter are easily spooked by retracements, price fluctuations and especially baseless claims by those with hidden agendas — where the former laugh with derision. As what may be the single greatest technological revolution since the birth of the internet, blockchain and cryptocurrencies are most definitely here to stay, and are just getting started.