Since the fall of 2021, the crypto market has significantly declined. Coin and token prices have plummeted, and users have become cool toward digital assets and blockchain. That is why experts have named this phenomenon "crypto winter.” Will this period last longer, and what should cryptocurrency projects expect in the new year?
Dante Disparte, Chief Strategy Officer and Head of Global Policy for Circle, noted that the bearish trend in the crypto market, the bankruptcy of Three Arrows Capital and other cryptocurrency lenders, and the collapse of the FTX exchange caused a real "Ice Age." It now leads to a precarious situation that has put many cryptocurrency projects at risk. The total market capitalization has decreased by $2 trillion. Thus, the crypto market has most likely reached the bottom. But Disparte believes that this situation lays the groundwork for more responsible and affordable investments. He compared the current bear market to the dot-com bubble, after the collapse of which the Internet passed into the hands of companies with sustainable business models. Therefore, adverse events in 2022 may mean a more responsible attitude toward blockchain and digital currencies. And the growing share of crypto coins in the financial services sector can only improve the situation.
Despite the troubles in 2022, the new year can turn the crypto industry into a thriving market. However, such a task requires several essential conditions to be met. Morgan Creek Digital Managing Partner Mark Yusko voiced the first of them. In an interview for the Blockworks Macro podcast, he noted that digital assets must offer customers a particular value. And for this, digital currencies need to be backed by equity or credit capital. According to Yusko, a rough token is not enough, as it does not give investors a share of the cash flow. The second condition is creating an insurance pool based on the part of the transaction fee. It will guarantee "security of last resort" and return of investments to users in case of a cryptocurrency project collapse.Bill Miller, the founder of Miller Value Partners, also said his word on this issue. He remains optimistic about digital assets and explains his forecast through the gradual maturation of the market. The 72-year-old billionaire predicts that most institutional investors will use BTC as a risk-hedging tool in the long term.
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