The crypto market is falling falling falling. Has the balloon popped for good? Will Bitcoin survive?
A friend asked me recently if crypto had a future. I hadn’t expected this question, I hadn’t even considered this question. Does crypto have a future? Since investing in crypto, I have been doing so from a ‘bullish‘ perspective. Why was my friend now asking me if crypto had a future?
‘Yes’, I answered. That is what I strongly believe and what I will cover in this blog post. Read on below to find out why I believe crypto has a long future ahead of it. I will, however, also give my thoughts on why people may believe crypto is dead later on.
Please note that I am not a financial advisor and this is a guide only – I am not advising that you buy cryptocurrency. I do not know your financial situation and you should always perform your own research and make up your own mind. Investing is a high-risk activity and you should only invest what you can afford to lose.
Crypto is in a bear market right now as token prices and market caps fall. Many people are calling this a crypto winter. I believe this is a temporary dip and the market will come out the other side stronger than ever – crypto is not dead and will survive.
Why I believe crypto is not dead
Let’s first look at why I believe crypto is not dead and, in fact, only at the beginning of its journey.
Worldwide adoption is still low
This is my strongest counterargument to the argument that crypto is dead, and what I said to my friend when he asked his post-inspiring question.
The percentage of the world population that holds crypto is low – Finbold estimates 10% adoption worldwide. If we combine that low percentage with the overall market cap listed on CoinMarketCap – over $1 trillion, we can begin to see the staggering potential for this emerging investment space.
Some quick research returns that over 50% of Americans and over 30% of the British population are invested in the traditional stock market. From this, we can assume that crypto adoption is still in its infancy and has a lot of growth before it. You may argue that adoption is at 10% for a reason, but I hope I will convince you in this post that crypto is still a young and growing entity.
Crypto is affected by real-world events
Although a digital asset with no physical presence in this world, crypto is still strongly affected by real-world events. There are currently various world events attributed to investors being wary with their investments – the war in Ukraine, inflation, and the energy crisis being amongst the most prominent.
These real-world events are causing investors to be extremely conservative with their money. Big investors will slow down their investing, while smaller investors will be more likely to stop investing entirely, or even remove money from investments.
I believe that the result of investor fear is amplified in the crypto market. The newer and, at least currently, more unstable investment will likely have people more fearful of losing money at a time when they cannot afford to.
As the world begins to sort itself out we should see a return of belief in the crypto market and investments as a whole.
Crypto is in the hands of the young
From the same Finbold post mentioned above, we can see that younger generations are investing in crypto more than older generations. With the inevitability that wealth will be passed down from older to younger generations, we can follow the logic that money will transfer from the traditional stocks & shares markets to crypto.
Millennials have a lot – and I mean a lot – of inheritance money coming their way.
Sponsorship & Marketing
It’s beginning to feel like you can’t get away from crypto advertisement. TV, radio, sports, and almost every website is peddling crypto in some way or another.
Let’s look at sports. Sport is a leading market for advertisement and a good place to see where advertisement money is being spent. Formula 1 has seen a large increase in crypto sponsorship, both for teams and races. The 2022 Superbowl had numerous, extremely costly, crypto advertisements. Timesquare, one of the most lucrative advertisement spots, has seen crypto advertisements. And the most worldwide sport – football (soccer) – is being infiltrated with crypto sponsors and fan tokens. The list could go on.
Public awareness is being heightened with such huge amounts of money being thrown into advertisements so it is hard to imagine that crypto adoption will not increase. The power of advertisement is indisputable.
Ease of access
With so many places and ways to buy crypto, the barrier to entry for crypto investment is falling away quickly. If you have a means of payment and an internet connection, then you can start investing in crypto.
As crypto becomes more and more mainstream, the buying process will become second nature to many. The fear factor will begin to dissipate, allowing the more cautious internet users to move into the crypto space. Even the most un-tech-minded folks will be able to get help from tutorials or, because of the growing popularity, will no doubt have family that have invested previously and will help them out.
Crypto is no longer only for ‘nerds’.
NFTs & Web 3
NFTs and Web 3 are beyond the scope of this blog, so I’ll only give a brief summary of why they will be beneficial to crypto.
It is hard to ignore the great explosion of art that has come about from NFTs (non-fungible tokens). This is a good thing for the crypto space. The two go hand in hand and are often hard to pick apart.
A lot of crypto tokens and exchanges have released NFTs as part of their service and so as one grows, the other will be sure to follow.
Web 3 will be based on public blockchains, which is what crypto runs on, so what is good for one is good for the other.
Why would crypto be dead?
There are one or two main reasons that I can come up with to explain why people may believe that crypto has run its race and is on the way out:
The market is plummeting
Crypto is in a bear market right now. The charts are red and continue to drop fast. Bitcoin has recently dropped by over 50% from its high. Investors are fearful for the future of their investments. But the dropping crypto market isn’t a stand-alone event – it ties in with the stock market falling and serious world events.
With crypto still being a relatively new investment option, it is likely to see selloffs before some of the older more ‘stable’ investment options. But as we wouldn’t expect the stocks & shares markets to die off, why should we believe that the crypto market won’t bounce back also? Crypto has seen many dips over the years and it has always come back stronger than before.
It doesn’t ‘do’ anything
Crypto doesn’t have any real-world purpose – it exists only to be an investment option. This is something I have heard a few times now, and I admit that before I looked into the world of crypto, I was of a similar opinion. I thought it was a fad and just there as a sort of Ponzi scheme.
It doesn’t take much research, though, to realize the benefits that crypto will bring to the world. Again this is out of the scope of this post, so I’ll just highlight the most exciting prospect to me – crypto takes banks out of the equation. Our money, before crypto, was held, used, invested, and transferred by banks. But now we can take control of our own money, send it across the world in a matter of minutes – if not seconds – easily change where it is invested, and swap it between savings options at the click of a mouse. And all with increased transparency.
By using crypto, we aren’t making bankers’ bank accounts fat off of our money. We are removing a single point of failure. We are taking the power back.
While considering if crypto is dead, you may also want to to consider the safety of crypto. I conveniently have a post about that too: Is Crypto Safe?.
Thanks for reading
Iain McClafferty – The Five Year Mortgage
