Talking about decline of Bitcoin, Jonathan Cheeseman, partner of investment firm Distributed Global, said macro trend, regulatory uncertainty, speculative dominance, short selling and scams are the main reasons for the largest cryptocurrency’s decline.
Referring to improved regulation and infrastructure of cryptocurrencies as a valid asset class, Cheeseman said, investors will get attracted by this type of robust and safe measures of inflation, “For some, things are even more acute now — Venezuela and Turkey being the most obvious examples — and debt sustainability is a real risk to many fiat currencies. In looking for global stores of value gold has served a purpose, but it is archaic. A digital store of value is both more practical and more in touch with the growing millennial generation.”
For a strong infrastructure to withstand an assets class like cryptocurrencies, it has to be resolute and firm as investors who will be answerable are mainly institutional investors and large-scale retail investors. Publicly traded instruments, that allows and determines the demand for cryptocurrencies from investors, are not in place.
Support level, which helps cryptocurrencies gain upward momentum and surge beyond a base level, was not seen in case of Bitcoin over the past years
Weak infrastructure and absence of essential regulation have resulted in interruption of flow of money from the capital market. This led to the creation of bubble in the cryptocurrency market this year, same as like the bubbles of 2012 and 2016. Fussy investors and speculators were the ones who set-off correction in the bubbles.
But correction won’t follow the previous trends this time just like recovery. Although, 80 percent of the corrections followed previous patters, but it will be an altogether different scenario for recovery.
Support level, which helps cryptocurrencies gain upward momentum and surge beyond a base level, was not seen in case of Bitcoin over the past years. In 2018, the largest cryptocurrency made six attempts to break out from $6,000 mark and through many ups and downs, it has not fallen below the mark.
The regulatory framework and infrastructure look positive and expected to lure more institutions to espouse crypto-market in spite of its volatility.
In Cheeseman’s words,
Regulators across the globe have struggled with how to responsibly police crypto. A decentralised movement poses a lot of complications in classifying the assets and bad actors muddy the water. As a result, things have been moving fairly gradually, but overall regulators have taken a tone that shows they respect the potential innovation. The regulatory uncertainty has, in turn, slowed institutional investors, as have the lack of custody, insurance, data and risk management solutions.
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A social media geek, Chandrakana Ray loves to track every buzz around the ever volatile cryptocurrency market, swinging moods of the crypto titans and unearths more about blockchain technology to make it a pleasant read for crypto enthusiasts. As a Business Correspondent with Cryptodawn, her writings zero in on every development of cryptocoins with an aim to give the most of it. A gourmet, she delves into myriad culinary to satiate her gastronomic urge.