Mature #Crypto market will draw more institutional traders this year and see less volatility, analysts predict
April 20, 2018 (Investorideas.com Newswire) It has always been a well-known fact that cryptocurrencies can be volatile when it comes to their value, but this year alone their value has dropped more than 50 percent. Despite this drop, a huge number of people are still interested in trading in these digital currencies, meaning that some analysts remain positive that they will grow ever more popular in the not too distant future.
The incentive for this popularity could have something to do with regulatory clarity, and although at the moment the market is mainly dominated by retail players, this clarity could tempt some institutional investors.
In 2017, the price of cryptocurrencies were sky rocketing. Yet recently the market capitalisation of the industry reached US$261.6 billion, a drop of 57 percent since the start of the year, according to Coinmarketcap.com. The fact that just a year previously the value was so much higher than this simply demonstrates just how erratic this bourgeoning industry can be.
Adrian Lai, the founding partner of Orichal Partners, an investment firm with a focus on cryptocurrencies in Hong Kong, claims that the reasons that last year's market was irrational was due to the lack of regulatory oversight and institutional investment. Despite this, in the future he believes that there will be more regulation, which in turn could reduce market manipulation and volatility, and encourage larger institutions to get involved.
Contrary to what many individuals might believe about cryptocurrencies, governments and regulators are not turning their back on this form of digital currency. In fact, some have even increased their oversight on initial coin offerings, which is a way for businesses and individuals to raise enough funds to issue their own cryptocurrencies.
"Regulators are not banning the development of cryptocurrencies, but are trying to better regulate the market, which should help the industry mature," Lai said.
On April 5, the chairman for the US Securities and Exchange Commission (SEC), Jay Clayton, stated that this crackdown is not to drive out cryptocurrencies, but actually has the aim of protecting consumers and reducing the risk of fraud. He believed that distributed ledger technology has "incredible promise for the financial industry,", and the oversight could actually benefit the market in the long run.
The country of South Korea is one of the few that has been thinking about banning cryptocurrencies completely, yet more recently it has started to soften this approach. In fact, the government may even support 'normal' crypto trading.
In 2017, the Japanese Government required all cryptocurrencies to register with them before they could continue running, and also actually recognised the digital coins a legal tender.
Lai quotes "If the regulatory stance gets clearer, large funds will be more assured and willing to commit significant capital,", when he was talking about how there has been a noticeable increase in certain typed of investors like private banks.
A survey what was funded by a Beijing based digit currency exchange came up with some interesting findings. Overall it had around 18000 responses which came from investors from 23 countries. 78 percent of responses believed that in the next three months, the market value of cryptocurrencies will follow an upwards curve, and then 88 percent believed the market will continue to grow in size.
The record price of Bitcoin came not that long ago, on December 17, now however, it is now a third of this price, which could be part of the reason that not everyone is confident about its future.
The global economist for Capital Economics for example, Vicky Redwood, thinks that the price will continue to fall in the near future, quoting, "it is simply not a credible long-run alternative to conventional currencies" however, Samuel Ankeny from Cryptotraderpros.com believes "the markets will continue to grow for the foreseeable future as cryptocurrencies become more mainstream but may suffer short-term losses but will recover and surge forwards towards mid 2018".
Original Source: BitMoneyNews.com.
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