Crypto is definitely dead. But long live crypto!

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The crypto industry is facing a very difficult year 2023. In the longer term, however, there’s no reason why she shouldn’t rise from the dead, as she has done in the past.

Skeptics have long suspected as much, and now they are being vindicated by the fiasco surrounding the now bankrupt crypto exchange FTX, in which the entire crypto boom was built on sand. Bitcoin, Ether, and just about every other token and altcoin are nothing more than a big scam, designed only to take hard-earned money out of the pockets of speculative investors and gullible crypto enthusiasts.

Spectacular bankruptcies, sensational hacks, and scams are hard to beat for daring, along with billion-dollar meltdowns, brazen scandals, and embarrassing confessions truly made for an annus horribilis in the crypto industry. . The year 2022 was the first full year in which cryptocurrencies definitely hit the mainstream, but in hindsight it apparently turned out to be a complete disaster.

Cascading collapse

Starting with stablecoin Terra and its sister token Luna in May, the crypto pyramid collapsed this year, triggering a domino effect that took the entire crypto market with it, via industry giants like Celsius Network, Voyager Digital and Three Arrows Capital (3AC), to FTX and BlockFi. Meanwhile, hackers are estimated to have gotten away with more than $3 billion in 2022 alone. More than two-thirds of the total cryptocurrency market capitalization evaporated during the year.

This is not what a trust-based foundation looks like. Fear, uncertainty, and pessimism seem to be reaching unprecedented levels around crypto, and many investors have lost interest and exited the cryptocurrency market.

Does History repeat itself?

And so the doomsayers repeat their mantra that the crypto market is dead, put into an early grave by pure speculation, especially since the two most important cryptocurrencies, Bitcoin and Ether, are considered a fad , without use and not supported by any active physique.

Granted, at least 95% of all tokens are junk, and many of them are unlikely to survive the crypto winter the industry finds itself in. But is the industry doomed? The market has already crashed over 80% in the crypto crashes of 2014 and 2018, yet the industry has emerged stronger from each of these crises.

External influences

The short to medium term outlook for the crypto market looks rather bleak, with 2023 set to be a better, albeit very challenging year, while the long term future still looks hopeful and bright.

Shaking and recovery

Most of the catalysts that have contributed to the crypto market crash since November 2021 cannot be attributed to the underlying technology. This was mainly due to external factors, such as stricter central bank policy, fraudulent crypto readers, and questionable business models.

As painful as the crypto winter is, the associated disorganization and recovery process is healthy in the long run, as weak competitors with obvious design flaws are punished by the market and eliminated.

Above all, the excesses of the wild speculation of recent years are ruthlessly uprooted. The disillusionment is likely to last for some time, so it seems unlikely that bitcoin will return to its all-time high anytime soon, not least because the low interest rate phase that encouraged speculation is now over.

Capital market cycles

Boom and bust cycles are the essence of all capital markets. But cryptos, as a controversial asset class, seem to get a lot more media attention than other investment vehicles.

Often lost in the general noise is that in the absence of proper global regulation and due to their young age, cryptos like Bitcoin and Ether are still very vulnerable to break-up. Both, however, have uses beyond mere speculation or criminal activity, as is often accused.

Attract new investors

Bitcoin is increasingly used as a fast money transfer method via the Lightning Network, while Ether is evolving into a currency for Web3 and the Metaverse. What is needed are stronger guardrails providing more legal and investment certainty in the crypto world in the future.

At the same time, it would be illusory for all risks to be regulated. The task of governance rules is to create a consistent and reliable regulatory framework. With stricter regulation, the trust and acceptance of crypto assets is increasing. If top financial institutions like Blackrock and Goldman Sachs continue to support crypto, it will ultimately attract new investors.

Innovative and promising

Sound crypto businesses do not take matters into their own hands, but take advantage of opportunities that arise for new business ideas. And, last but not least, the blockchain industry is expanding much more than just cryptocurrencies in disfavor.

The tokenization of digital assets is seen as having a promising future, with increasingly attractive use cases. Technology can lead to a more efficient, transparent and accessible securities trading system.

Rise from the ashes

As long as the blockchain industry continues its momentum of innovation and clearer global regulation provides a sound foundation for the future, there’s no reason the crypto industry shouldn’t be reborn. from its ashes once again, as it has done in every instance in the past.

Especially in an industry as dynamic as the blockchain industry, new technologies could emerge tomorrow that nobody even thinks about today.

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