What is Holding The Crypto Market Back?

In December 2017 to January 2018 the Crypto market had a significant rise in value. You probably remember hearing about it on TV or at a family BBQ. So what's happened since then? Why is it that almost three years on we are not at the same prices? There is an incredible amount of development going on in the crypto space, but why is it not being reflected in the price? Let's look at a few possibilities and why you don't need to be worried.

Potential Reasons the Crypto Market is Being Held Back


  • Coronavirus-led risk aversion in the markets

  • Market manipulation

  • Regulations are taking a while in the US

  • Companies haven’t fully finished monetising the technology

  • Large institutions are buying crypto up at low prices in what's called Over The Counter sales. This means it doesn't impact the price because it's not a trade placed in the order book.

  • The Department of Justice is investigating some Crypto's like Tether (USDT).

  • Lack of liquidity deters widespread adoption

  • Security remains a concern for prospective investors

  • It is still quite confusing for most people


Here's Why You Shouldn’t Panic

  • We have seen this bearish pattern many times before, if we look back over the last year of charts you can see clear bull and bear cycles.

  • Institutional Money is actually starting to pour into the industry. Institutions want a return on their investment. When they start allocating funds to the market we know the prices are bound to follow at some point.

  • Despite it taking a while, there are increased regulations, as of October 2020, this is a real hot topic in the US Congress with some Senators really pushing for Crypto Adoption. The regulations will help weed out the bad actors and enable legitimate currencies and exchanges in the space to thrive.

  • Exchanges have improved their websites so when the influx of buyers comes, there will be fewer issues compared to 2017 when a lot of exchange websites crashed and hit their capacity for new accounts.



What Needs to Happen to Improve It?

Regulations


Regulations establish order so that a system can function more consistently, safely, with mostly predictable outcomes. It's expected that regulations if done properly, will stabilize the market and make it a safer investment.

Part of the reason it's taking so long is that the US has so many regulating bodies and they all need to agree, this can be complicated especially when defining cryptocurrencies because each regulating body wants their slice of the pie. Are crypto's securities, are they property, are they commodities, are the currencies? This decides whose responsibility it is, and how they will be taxed.


Australia has a very good regulatory environment and has a positive long term view of Cryptocurrencies.

Liquidity


Liquidity describes the degree to which an asset can be quickly bought or sold in the market at a price reflecting its intrinsic value.


Increased liquidity would mean price stability, easier, cheaper transactions, and more investor confidence. It would also prevent Bitcoin whales, or large buys, from manipulating cryptocurrency prices.

What Do We Do While We Wait?

Cryptocurrency's biggest problem is also its greatest investment advantage: It’s brand new. Once exchanges are standardized and provide enough liquidity and security, investors will be confident enough to go long in crypto.


If you've ever said "I wish I bought Facebook, Amazon, Apple, Google or Bitcoin back when they were low" it's important to realise that we can only ever know that in hindsight.


The crypto market has the potential to perform just as well as all of those investments over the long term.


Cryptocurrencies are as real as any other asset: The more institutions and people believe in the power of instantaneous, borderless assets, the more they’ll be worth.


You can buy crypto assets with as little as $0.50 on CoinSpot. There is no minimum investment. It's a regulated exchange and ticks all the boxes for security. Try it here today!


"Investing in knowledge pays the best interest" Benjamin Franklin


I'd love to hear your thoughts in the comments, and also check out my Twitter, Facebook and Instagram Account.


Talk soon, Mitch Hamilton

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