Adopting cryptocurrency and its underlying blockchain technology to work with already existing systems, of course, has posed challenges. Digital cryptocurrency overall has had its fair share of failures. But despite them, many people still believe cryptocurrency has a bright future.
Like what we see in the cryptocurrency price movements, has had its ups and downs. However, the following trends of the cryptocurrency market give us a somewhat optimistic idea of what we can expect in the future:
1. Cryptocurrencies will receive more patronage from institutional investors.
Given that more and more governments are looking into the regulation of cryptocurrencies, investors are feeling more comfortable about putting their funds into them.
With added regulation, institutional investors will be able to breathe easier and have less anxiety about the uncertainty of the cryptocurrency market. In fact, more investors are seeing cryptocurrencies as a viable asset because of their attractive returns: In December 2017 bitcoin hit a record high of almost $20,000 for one tcoin. Although the price has gone down since then, experts predict that Bitcoin’s value could actually go higher than that 2017 figure.
Billionaire investor Tim Draper boldly predicted, for example, that Bitcoin would achieve a value of $250,000 per coin by 2022.
That was a bold statement. However, any rise in that direction will be a gradual one. While some institutional investors are investing in cryptocurrencies, others are diligently watching the market. Therefore, the introduction and implementation of regulations may attract some of those watchers to jump in.
2. Why cryptocurrencies are being regulated
Lack of security has long been one of the biggest concerns for traders. In fact, a survey conducted by Encrybit, a cryptocurrency exchange platform, revealed that 40 percent of the participants polled saw security as a major concern.
According to the Securities Exchange Commission, cryptocurrency exchanges overall remain unregulated. This is in contrast to cryptocurrency’s conventional currencies counterparts, which are regulated by the central banks of their respective countries.
At times, hackers and cybercriminals have already taken advantage of the lack of cryptocurrency regulation and made trading in these currencies unsafe for investors.
However, attempts are in progress to regulate cryptocurrency in the international arena. For example, at the G20 summit in Argentina, directives were made for global regulations.
3. Cryptocurrencies won’t stop being volatile.
Despite the measures to ensure stability in the cryptocurrency market, it’s still a struggle to stop or at least reduce cryptocurrencies’ volatility. There are still so many factors keeping them volatile. These include: the currencies’ lack of intrinsic value, the lack of institutional capital, the implementation of regulations and thin-order books, among other factors.
Although regulation of the currency and their markets will help lower volatility, that alone will not be enough to make a considerable difference in cryptocurrencies’ volatile nature. As cryptocurrency trading becomes more popular, we should be seeing an ebb and flow of volatility.
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