Market Sentiment of Crypto Investors
2022.12.20 07:14
Market Sentiment of Crypto Investors
Budrigannews.com – To borrow a phrase from Queen Elizabeth II of Great Britain, the cryptocurrency community will not have a happy memory of 2022.
Investors began to have serious existential concerns toward the end of the year as a result of the rapid succession of collapses, contagion, and collapses.
After all, bitcoin, the largest cryptocurrency, hasn’t been above water in more than a week and is down about three-quarters from its $69,000 peak in November.
The 22,000 tokens and coins have a market value that is less than a third of the peak of $3 trillion in November 2021, and many of them are in a coma or even dead.
That has been a harsh reality check for an industry that began 2022 with hopes of widespread mainstream institutional adoption, of bitcoin replacing even gold as the world’s inflation hedge, and of endorsements from Tesla (NASDAQ:). Elon Musk, CEO of Inc., and the exuberant celebration of non-fungible tokens worth a billion dollars.
The Fed’s extreme hawkishness not only hit cryptocurrencies hard, but it also caused the crash of a stablecoin called TerraUSD, which led to a “Lehman moment” in which funds and brokers like Celsius and Voyager went bankrupt.
The demise of Sam Bankman-Fried’s FTX exchange a month ago was viewed by some as the final nail in the coffin for the cryptocurrency industry.
There are significantly fewer ardent crypto enthusiasts predicting a rebound this time around, in contrast to 2017, when bitcoin crashed similarly spectacularly.
Instead, the “I-told-you-so” case for regulators has been 2022, when they have mostly kept out of the crypto world or even banned trading in cryptocurrencies.
Bitcoin’s modest rise this month, according to the European Central Bank, is an “artificially induced last gasp before the road to irrelevance.”
In point of fact, the fact that mainstream finance has largely escaped contagion has been the only contributing factor this year. The majority of the excesses, unchecked lending, and fraud involving billions of dollars have occurred within the crypto ecosystem.
Decentralized finance and private cryptocurrencies, on the other hand, no longer appear to be viable alternatives to the traditional banking system.
As retail and institutional financial backers lose trust in crypto administrators, a large group of policymaker voices and even crypto noblemen are joining U.S. SEC Seat Gary Gensler in calling for guideline.
James Malcolm, a strategist at UBS, cites the growing correlation between cryptocurrencies and micro-cap U.S. stocks as evidence that bitcoin and other tokens can thrive as niche, diverse assets in investment portfolios.
He states, “It’s wrong to say this thing is going to curl up and die completely because there are parts of it that can be useful in other areas, and there is probably a modest cryptocurrency market that will continue to thrive on the margin of financial markets.” “It’s wrong to say this thing is going to curl up and die completely.”
However, it may take months, if not years, to implement the kind of regulation investors need to feel safe dealing with crypto brokers and exchanges, such as capital adequacy or transparency.
Morgan Stanley (NYSE:) states, “Some asset managers are looking at this as a 10-15 year journey to digital assets becoming fully mainstream.” said in a note that summed up the discussions the bank had with the crypto industry.
In the meantime, the traditional financial sector might use the crypto crisis to boost its game next year: acquire blockchain-based platforms and assets, issue tokenized bonds and stocks, or possibly even introduce additional digital currencies issued by the central bank.
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According to Malcolm at UBS, it may just demonstrate that cryptocurrency was intended to be more of an “evolving rather than revolutionary development in financial markets.”
