Lumping “crypto” as a whole in with the FTX failure is short-sighted and just incorrect.
It has been about a year since the downward spiral of crypto began. Some new investors have lost everything, and the industry has the trust and excitement that comes with investing in emerging technologies. Crypto is far from dead but is severely wounded and will take a long time to recover. But how?
Cryptocurrency has the potential to revolutionize finance and currency exchange, but it is currently plagued by trust issues. People are hesitant to invest in cryptocurrencies due to the lack of regulatory oversight and the prevalence of scams. It is important that we address these trust issues by increasing transparency and trust in the industry, such as by developing more stringent regulations and better consumer protection measures. Doing so can create a more secure environment that encourages the use and acceptance of cryptocurrencies.
First, we should address the trust issues that currently revolve around crypto. Not only do we see corruption and failure at some of the biggest trading marketplaces (looking at you FTX), most of the new investors we gained from 2019 to 2021 have lost a lot of money in the current crypto downturn.
If you likened the situation with FTX and Bankman-Fried to Bernie Madoff, I would have to agree.
FTX failed, so what; capital trading firms have failed before and will fail again in the future. Some marketplaces make a comeback, and others do not. $51 billion in losses aside, FTX as a company was beyond reckless with funds and investor portfolios. You simply can not make sound decisions when under the influence of amphetamines. Trust in FTX will not be returning.
Cryptocurrency has been a topic of debate for many years now, and it’s no surprise given its volatile nature.
Cryptocurrency is a risky investment with ups and downs. Like any other investment, you should only gamble on what you are willing to lose. While cryptocurrency can be extremely lucrative, it is also incredibly risky. The value of cryptocurrencies is subject to drastic changes due to market conditions and can fluctuate quickly and unexpectedly. As such, investors must approach cryptocurrency cautiously and take steps to protect themselves from losses.
Before November 2021, the market was growing at a steady pace and looked like it would keep growing; investors were seeing nice returns in a short period of time.
The growth we saw in early 2021 made many early Bitcoin and Ethereum investors very rich, and the marketplaces that traded in crypto started to be flooded with Alt-Coins looking to duplicate the excitement and monetary value of Bitcoin, though with little utility. Of course, marketplaces took advantage of this situation by propping up the new alt-coins and creating their own coins with little to no utility.
The overwhelming greed and impractical enthusiasm of the FTX founders and other marketplaces are as much at fault for the market crash as the investors themselves. Everyone believed the crypto market would be making a dramatic turnaround as fast as it had dropped. Couple that unrealistic optimism with market turmoil, young CEOs, amphetamines, and greed, and you have a recipe for a meltdown.
The stock market returned after the depression, crypto can do the same.
It seems that crypto’s gains in trust and legitimacy went out the window with so many investor dollars. The fact is, someone made money by selling something that they had bought at a lower price. That is the object of the game.
The stock market experienced a major downturn during the Great Depression but rebounded in the years that followed. Cryptocurrency has been experiencing a similar downturn in the past 12 months, and many believe that it is only a matter of time before it returns to its former glory. With the increased accessibility and security of digital currency, the potential for growth is immense. As more people begin to use cryptocurrency as an investment and trading tool, it is likely that the market will return to its pre-depression heights.
Crypto is no different than any other currency in that it holds value when it is accepted by many people as a medium of exchange. As more and more people become familiar with the technology and accept it as a viable form of currency, the value of crypto rises. This is similar to traditional currencies in that the more people agree it holds value, the more likely it will be used in everyday transactions and increase its value.
What will it take for a crypto rebound?
Predicting what will be needed for a sustained rebound in the cryptocurrency market is difficult. Still, it will likely involve increased regulatory clarity and adoption, wider access to investment platforms, innovative blockchain-based applications, and a combination of institutional and retail investor interest. Blockchain technology has come a long way in recent years, and the potential to revolutionize financial systems is tantalizing.
However, it needs to be utilized at a larger scale to make an impact. This will require an influx of capital and more businesses and financial institutions to accept cryptos as a legitimate payment method. With the right conditions, it is possible that cryptocurrency could once again experience a period of growth and development.
Bucky has been into AI, online marketing, and website performance since its creation in 2020. Based in Los Angeles with their cat, Bucky finds joy in the idea of nature, being outdoors, and engaging with friends.