Following the meteoric rise of cryptocurrencies in 2017, the crypto market has lost roughly 85 per cent of its value since its jaw-dropping peak. This drastic turn of events, which pushed bitcoin from an all-time high of US$20,000 to US$4,000, resulted in a massive downturn also widely known as the “crypto winter.”
Despite some recent, promising signs, the market is still nowhere near the highs of 2017. However, as the hype dies down and more sophisticated projects cut away from the noise, the community seems to be doubling down and focusing on technology and adoption more than prices of tokens.
As a result, we are seeing a market and an ecosystem that is now much healthier and stronger than it was when prices were breaking record highs on a daily basis.
While it is often assumed that there are very little bearings between the financial markets and cryptocurrency industry, the general mood on investing has indeed affected the cryptocurrency market demand.
Towards the end of 2018, as investors and companies continued to grapple with diminishing capital and mounting pressure. The industry was plagued with numerous reports of layoffs, collapsing divisions, and ongoing restructures.
Understandably, investors are now shying away from cryptocurrency in general, but many are also taking the time to learn more about what the technology does, and explore in-depth analyses of use cases.
The emergence of institutional participation to drive adoption
Growing institutional interests signals that the crypto market is no longer a playground for short-term day traders purely looking to cash in on the hype. Rather, it has become a sandbox for serious investors with real money being channelled into the long-term growth of the blockchain industry as a whole.
Looking ahead, the crypto market appears to be en route to becoming even more institutionalised, with trading systems replicating that of Wall Street’s infrastructure. Over time, as investors become savvier, the crypto trading market will grow to become more sophisticated, professional, and efficient.
The rise of stablecoins
As the market matures, investors will most likely express a greater demand for stablecoins, which can offer better security and stability.
Amidst the uncertainty of the bear market, stablecoins hold greater promise in merging the innovation of digital currency and traditional physical assets.
Historically viewed as a safe-haven investment and a long-term store of value, gold has proven extremely stable so far in 2019. As a market, Asia is one of the biggest consumers and traders of gold.
In addition, Asia remains as the epicentre of the crypto and blockchain ecosystem. Exchanges, trading houses, venture funds, and investments are still predominantly emerging from Asia. This makes Asia the perfect environment for stable, tokenised asset innovation.
Unlike the traditional means of gold purchase, tokenised gold allows users the flexibility to transact 24/7 on the blockchain, without being subject to the arduous task of storing, holding or transferring physical assets.
Tokenised gold maintains the convenience of cryptocurrencies, while deriving its value from a real-world asset. This serves as a bridge between the old and new economies, and could very well prove to be the next wave of stable-asset coins in this ecosystem.
While the outlook for the next crypto bull run remains unclear, the market for asset-backed tokens appears to have a bright future ahead.
The silver lining
During the bull run of 2017, countless new crypto projects emerged, many of which mounted too much capital on implausible hypotheses. The year-long bear market brought about a healthy cleansing of the ecosystem, weeding out the bad actors and leaving only the most legitimate and innovative projects to survive.
However, at the same time, falling prices also served as a stark reminder for future investors to be mindful when it comes to making investment decisions, and to carefully assess the risks before diving in.
In the end, the price of cryptocurrency is not the primary indicator of success or failure. In the face of the bearish market situation, what matters most is the long-term potential of the technology and its adoption.
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