While the year 2021 was dominated by cryptocurrencies and other digital assets, 2022 has been a rather painful reminder of the crypto industry still being in its infancy, reflected by the more than 50% correction in prices of major cryptocurrencies since their peaks in 2021.
A bulk of the new crypto investors who entered into the cryptocurrency space last year are staring at deep losses and are teetering on the brink of losing conviction about the future of this volatile asset class.
However, delving into finer details such as the various innovations being introduced, new projects being launched, and increasing institutional investor participation, it seems fair to surmise that the crypto ecosystem is only overhauling itself for the next leg of growth.
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Cryptocurrencies entering into mainstream adoption
With nearly 600 crypto exchanges across the world catering to more than 320 million crypto investors globally, cryptocurrencies have found acceptance among a wide population base in major economies today, according to statistics
In fact, in countries such as the United States, South Africa, Russia, Vietnam, and Nigeria, more than 10% of the population has invested in cryptocurrencies.
What’s more, other digital assets such as non-fungible tokens (NFTs) have also seen widespread adoption.
This is indicative of the larger trend of rising crypto interest among the internet-savvy population.
Institutional investors too have made a beeline for popular cryptocurrencies like Bitcoin BTC/USD and Ethereum ETH/USD, shoring up on their investments since the onset of the COVID-19 pandemic.
As a greater number of crypto fans and investors continue to enter this asset class, the current bearish sentiments could see a reversal and lead to the start of the next bull cycle in major cryptocurrencies.
Impact of impending regulations that will define crypto’s future course
Despite countries like Singapore, Switzerland, Malta, El Salvador, Luxembourg, and a few others enacting balanced crypto frameworks fostering crypto innovation, investors and crypto entrepreneurs alike continue to await the forthcoming crypto regulations in major economies like the U.S.
With the U.S. contributing to the largest number of crypto investors by volume, all developments will be keenly watched by the global crypto community.
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Moreover, while expectations are muted for countries like China to relax their stance on these new-age digital assets, other Asian economies like India are expected to affirm their own crypto framework.
If all things fall into place, the combined effect of heightened investor interest and the introduction of pro-innovation crypto rules should serve to boost crypto adoption further, providing a further boost to cryptocurrency prices as well.
Building impeccable governance structures to engender a trustless ecosystem
Crypto entrepreneurs and developers have shifted focus to building sustainable blockchain ecosystems with cross-chain interoperability.
This is a marked shift from just pursuing user adoption to providing a more connected and seamless user experience. The decentralized finance (DeFi) space is undoubtedly seeing the greatest number of developments, followed by firms building the Metaverse.
As more users shift to consuming in the Web3 world, ensuring that crypto platforms remain secure and scalable will be of utmost importance.
With this in mind, blockchain protocols like Ethereum are making big changes to their governance protocols, even changing the consensus mechanism with an eye on the future.
Low transaction or gas fees, high transactions per second (TPS), and peerless security will be key aspects that will therefore remain the main pursuit for the crypto industry going forward.
Moving away from speculation to utility-based investing
The current crypto winter has humbled even the most ardent crypto fan, while critics continue to be surprised by the range of real-world use cases that the crypto ecosystem has spawned.
Investors would therefore do well to adopt a more long-term approach and narrow down on blockchain projects that are building the future of the Web3 world.
This may lead investors to a more value-driven investing strategy and would reduce their chances of plonking capital on dud projects that have little or no real-world utility.
As cryptocurrency prices hover near crucial support levels, it will be interesting to see how all these factors play out and determine the course of the crypto industry in general.
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