This year has been an unrelenting nightmare for global crypto markets. Even ignoring the extended bearish streak that saw over $2 trillion in valuations being wiped out, the string of billion dollar hacks, attacks, and scams, culminating with FTX a few weeks ago have all left investors undeniably weary and jittery. As the new year approaches, the industry remains set for a reckoning, and it’s not looking pretty.
While all of this paints a bleak picture for the much touted crypto future, in-reality crypto has continued its steady onslaught on the mainstream, despite the broad based selloff. Financial institutions, including the likes of banks, POS services, hedge funds, and other intermediaries, along with entire nation states have just started going big on this market, lending it much needed support for the time being.
With giants the likes of PayPal, Square, and Goldman Sachs now in the fray, and with users now able to buy crypto from banks like SoFi, the likes of another Sam Bankman-Fried reigning the markets with centralization is remain slim. The reluctance of mainstream financial institutions to cater to crypto has long been a roadblock, and now that it’s been lifted, there is seemingly no turning back.
Trial By Fire
The year 2022 was marked by woes, afflictions, and calamities for the crypto ecosystem, with the perfect storm of global macro headwinds, unjustifiably high valuations, and multi-billion dollar scams all coming to fore at the same time.
While this might seem more akin to death by a thousand cuts, some might see it as a remarkable show of strength and resilience, from which the entire ecosystem will only emerge stronger.
If anything, these scandals in recent months have only served to highlight the challenges and vulnerabilities of this economy, with innovative solutions such as ‘Proof of Reserves’ for exchanges already gathering steam.
The incessant rally to unfounded valuations during the course of the pandemic, and the rise of NFTs and meme coins were all symptoms of the same baseless optimism. The nosedive in recent months was a much needed correction, to help the markets reflect their justifiable values.
This helps bring the future of crypto markets back into the purview of actual innovations and value-added disruptions, as against mindless speculation and pump & dump schemes.
Utility & Use Cases
Despite the doom and gloom that has surrounded crypto markets in recent months, there is no denying that cryptocurrencies, tokens, and even NFTs actually serve a useful purpose. Ask anyone from a third-world country who has tried their hands at transferring funds abroad, and they will vouch for the remarkable value that crypto markets stand to add.
With speculation, along with fads and frenzies on the way out, and mainstream financial institutions putting their stamp of approval, the next bull case for cryptocurrencies will be drawn out, and driven largely by the phenomenal value creation of decentralized finance in global markets.
One of the biggest strengths of blockchain and cryptocurrencies is their ability to skirt through bureaucratic bottlenecks. This is evidenced by the rise of mirror protocol stocks, prediction markets, and a lot more, all with the potential to unlock substantial value for the global economy as crypto continues its unrelenting ascent.
Even though the near-term is filled with uncertainties, ranging from a global recession, recession pressures, and more, the crypto markets have essentially been de-risked. There are seemingly no downside risks, but tremendous upside potential, but the timeline remains uncertain.
The next bull-cycle for crypto markets will look past flag bearers such as Bitcoin and Ethereum, in favor of various DeFi tokens and utility coins, adding substantial value for early-adopters and investors. While we are unlikely to use crypto to buy gum over the next 5 years, it will play an outsized role in trade and commerce over this decade.