Opinion: crypto industry can reach stock market scale
In the future, the cryptocurrency industry may reach stock market volumes due to the increasing investor interest in digital assets. This opinion was expressed by the Governor of the Bank of Korea Lee Joo Yeol.
Many believe that the main cryptocurrency is a hedging asset that can “save” their savings, and bitcoin supporters are confident that BTC can replace gold. A representative of the Korean regulator pointed out that digital currencies have already gained popularity as investment instruments.
“I cannot yet say that digital assets are better than gold, but if the global cash flow continues to move towards NFTs and cryptocurrencies, it is likely that this industry will grow to the scale of the stock market,” said Ju Yeol.
And the head of the NH All100 consulting center Kim Hee Jong believes that digital assets are not yet included in the investment portfolios of clients due to high volatility, and local financial institutions do not risk working with them due to the tough position of the authorities.
However, the number of people willing to invest in crypto assets has increased significantly. According to Hee Jong, today not only young people, but also older clients are interested in investing in digital currencies.
Meanwhile, the beginning of 2022 was marked by a serious drop in the cryptocurrency market. Over the week, the price of BTC has dropped by almost 12%. Other popular digital assets fell 22%, hitting multi-month lows.
Experts note the growth of volatility in the crypto market at the beginning of 2022 against the background of the absence of a significant number of investors. As the leading strategist of EXANTE, Janis Kivkulis, noted, a drop in trading volumes was recorded on many crypto platforms. According to him, part of the positions that were betting on the growth of digital assets were closed, and some of the investors liquidated them in the wake of panic.
The recent unrest in Kazakhstan, which is one of the mining centers, has also become a negative factor for the cryptocurrency industry. Currently, the Internet is unstable on the territory, and banks are working with restrictions. However, experts predict that along with the stabilization of the political situation, the miners of Kazakhstan will resume work in the previous mode.
Another prerequisite for the fall of cryptocurrencies was the Fed’s position on tightening monetary policy. In the first week of January, a document was published, from which it can be concluded that the regulator is leaning towards a rapid increase in the interest rate and a decrease in the volume of assets on the balance sheet.
This, experts believe, was the reason for the outflow of funds from risky assets. The NASDAQ Composite index fell by 4.5% in 7 days, and the value of BTC followed the securities of large IT companies, said the head of Binance in Eastern Europe Gleb Kostarev.
Analysts believe that the decline will continue in the future. However, they do not exclude the market recovery by the middle of this year, including due to the continuing interest of institutions. How do you think the digital asset market will behave in the near future?
