Three Reasons Not to Panic When the Crypto Market is DownFrom bear markets, to bull markets, to HODLing and shorting, it seems there are countless terms to describe both the volatility in the crypto world as well as the strategies for navigating around it.
For novice consumers in the space, the hype can be overwhelming when prices are up and scary when prices are down. But it’s important to stay clear-headed in the midst of all of the buzz, and, when prices drop, to remember these three reasons why there is no need to panic.
We have seen this pattern many times before.
2018 is the third year in a row that Bitcoin and the overall market for digital coins plunged early in the year, according to a blog post called “The Perennial Dip” by Joe DiPasquale, the chief executive officer of Bitbull Capital. “It’s worth pointing out that this is nothing new for experienced crypto investors,” DiPasquale said, after sifting through crypto price data over the past three years. “Whenever the current ebb makes you nervous, just remember there’s another flow coming.”
Institutional Money is Entering the Crypto Sector
Many experts in the crypto community believe that the mainstream institutional adoption of crypto will inevitably drive up prices. “Institutional interest is now starting to grow regardless of the Google trends,” said CEO of Amex-backed crypto startup Abra Bill Barhydt back in March. “Once a large sizable chunk of Western institutional money starts to come in — watch out.”
Just a couple of months later, Wall Street has begun significantly warming up to crypto. In late April, Nasdaq announced a collaboration with cryptocurrency exchange Gemini in order to launch SMARTS market surveillance technology. “This is a major milestone in the application of SMARTS – and an important indicator of our commitment to expand the use of our market technology into non-traditional marketplaces, as well as new frontiers beyond the capital market,” said Senior Vice President and Head of Risk and Surveillance Solutions at Nasdaq Valerie Bannert-Thurner.
The momentum continued in May when Goldman Sachs also showed a commitment to expanding beyond traditional marketplaces by announcing that it would open a Bitcoin trading operation. “It resonates with us when a client says, ‘I want to hold Bitcoin or Bitcoin futures because I think it’s an alternate store of value,” said Rana Yared, one of the Goldman executives overseeing the trading operation.
May was also the month that thousands of crypto enthusiasts gathered at the Hilton Midtown in New York City for the Consensus conference. One of the largest crypto conferences in the world, Consensus drew over 4,000 attendees from leading industry startups, financial institutions, enterprise tech leaders, and academic and policy groups to discuss the future of digital currency economy and blockchain technology.
“Crypto still faces significant internal resistance and hurdles within traditional financial institutions,” said Fundstrat Global Advisors Head of Research Thomas Lee. “But it is encouraging, nonetheless, that a large share of incremental attendance as financial institutions.” In fact, Fundstrat expects the price Bitcoin to go up tp $25,000 by the end of this year.
Increased Regulation is Improving the Crypto Economy in the Long Term
2018 has been a year of regulation for crypto, and the question that’s top of mind for both those that are new to space, as well as industry veterans, is: How will these newfound regulatory initiatives impact crypto prices?
Many leaders in the space are optimistic. “These technologies cannot flourish and grow without thoughtful regulation that connects them to finance,” said Tyler Winklevoss, chief executive and co-founder of the Gemini Exchange in a recent Bloomberg interview. “As long as jurisdictions strike the right balance, we think that it’s going to be a huge boon and win for cryptocurrencies.”
Aviya Arika, head of blockchain innovation at Porat & Co. Law Firm is an equally strong believer in regulation’s positive impact on crypto prices. “Contrary to what instinct may tell you, regulation actually makes cryptocurrency prices flourish…Generally speaking, I think that as more jurisdictions regulate and clarify legal statuses of cryptocurrencies, crypto markets will become substantially more stable and widely adopted.”
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I, too, am optimistic about this emphasis on regulation, as I believe that it will help weed out the bad actors and enable legitimate currencies and exchanges in the space to thrive. While there may be some more dips in the short-term and financial institutions and jurisdictions iron out their crypto regulatory guidelines in the coming months, I believe these regulatory measures will only help crypto prices in the long-term.
Furthermore, in the past few months, I believe a generally positive shift has taken place in the public ’s perception of crypto. The digital currency economy is no longer removed from the federal government and mainstream financial institutions. Rather, they are all working together to establish a financial landscape filled with more opportunity than ever before.
This article was written By Chris Kline, Co-founder, and COO at Bitcoin IRA