September 29, 2023


Be INvestment Confident

Are Cryptocurrencies Now Officially Dead?

We all remember the cryptocurrency boom that shook the world. For a time it seemed like everyone was investing, and that cryptos might just become the next big thing. But now, just a few years later, the hype is almost non-existent. Which isn’t to say that big names like Bitcoin and Ethereum aren’t still active. They are, only they don’t make headlines like they used to.

It was, of course, primarily the crash of FTX that put out the crypto industry’s furnace. The scandal shook the world, and rightly so, given that the incident is amongst the biggest financial disasters in history. As of a recent report, the crash of FTX equates to trillions of dollars in fraud.

As a result of the scandal, governments around the world have jumped into action. In the United States specifically authorities took a firm stance, declaring that the crypto industry is in dire need of regulation.

Crypto is Dead in America

Globally respected investor Chamath Palihapitiya put it bluntly in a recent statement. He declared in no uncertain terms that crypto is dead in America. The words came after Chamath had previously been amongst the biggest Bitcoin supporters, once saying that Bitcoin would soon replace gold as a global standard. His change in tune is especially notable, pushing the message home that, for certain, the crypto boom is over.

In his statement Chamath was, of course, referring to the ramp-up in regulations. In his opinion, the new regulations will, without a doubt, dramatically reduce the appeal of cryptos across the board. At the peak of the crypto boom, much of the appeal was how freely and easily cryptos could be traded and sold. Plus, all trades went ahead without any regulatory interference on any level. Now, at least in the United States, the days of freedom are over.

But, with all of the above being said, cryptos are not necessarily doomed. Instead, they are more likely to settle into a niche.

Cryptos Must Abide by The Law

In the States, Gary Gensler, Securities and Exchange Commission (SEC) Chairman, recently declared that cryptos and trading platforms must abide by the law. Most traders will agree that abiding by the law isn’t a particularly controversial statement, especially given the endless reports of crypto fraud. FTX, although very public, is the least of the problems the industry has faced. In fact, crypto fraud hit such a peak that major, multi-million dollar scandals barely even made news headlines.

Gensler’s statement isn’t, therefore, aggressive, it’s a simple statement that cryptos do indeed need to be regulated. If FTX had been under the watchful eye of an authority, the scandal would likely have been spotted long before the entire company came crashing down.

So why is Chamath saying that crypto is dead in America?

Freedom Creates Abundance

As is well known to anyone with an interest in trade, an unregulated market is generally a booming market. Government regulations slow trade dramatically, forcing participants to meet strict sets of rules before they’re allowed to take action. The global crypto market was, and still is to a degree, almost completely unregulated. This means that crypto traders, exchanges, and outlets can do pretty much whatever they please. It’s a good ballpark to generate enormous trade potential, but also a market that allows for bad actors to take full advantage.

Once the government steps in, a free industry slows down dramatically. In Gensler’s view, as the United States steps up regulations, the industry will lose much of its vigour. Though, lost vigour doesn’t mean that the industry will cease to exist entirely. Instead, the market is much more likely to slow, gain stability, and settle into a niche.

It need not be said that some grossly misaligned crypto fortunes will be lost in the transition process. But for the average trader, the change likely won’t be so dramatic. At least, it won’t be so dramatic if the trader is keeping a close eye on how the market evolves.

The Change is Already Happening

To be clear, the crypto market changes we’re discussing aren’t due to happen in the future. They’re already happening, and at a fairly rapid pace. US-based Coinbase was recently issued a firm warning, with authorities proclaiming that the exchange is in violation of security laws. Bittrex, meanwhile, is currently under investigation for operating without a license. These are not small developments, and Coinbase CEO Brian Armstrong has gone on record to say that he’ll likely wind down operations in the States. But, with all of that being said, head to the Bella Vegas casino and notice something amazing. The online casino accepts Bitcoin.

Crypto Isn’t Going to Die

Cryptos are still much bigger, and far more widespread than most seem to realise. There is a major crypto presence in virtually every major country in the world, from Africa, to Asia, all across Europe, and the States. Government regulations may kill some of the aggressive forward momentum, but the fact of the matter is that cryptos like Bitcoin aren’t going anywhere fast.

Regulations are meant to protect the public, and if anything, are most likely to promote more confidence in the market. A market that is, for the first time, being watched by authorities. Although there may be some turbulence now, regulations might be exactly what the industry needs. After all, how many major industries can you think of that operate entirely without regulations?

Look into it and you’ll quickly realise that virtually all industries use regulatory standards to some extent. The truth is that cryptos are in dire need of rules, and have been since the very beginning.

Should You Invest in Crypto?

If you’re considering investing in crypto, but are hesitant due to the current market, there is an obvious answer. It’s probably best to watch, wait, and make a decision based on research.

It’s impossible to say what will happen to cryptos in the long run, and anyone saying they know the future is outright lying. The crypto market is uncertain, but has been for the longest time. If it’s your money, and you’re the one doing the investing, the safest bet is always to do research, then make up your own mind. Most of all, don’t get your information from any single, potentially biased source.