Many considerable steps have been taken to create a mainstream infrastructure around digital assets and blockchain. The recent crypto market plunge has raised doubts about the sustainability of this industry. The major decline of mid-November and the downward trend of the entire 2018 has led to critics and detractors claiming that a permanent demise in cryptocurrencies will happen soon.
This volatility has caused major uncertainty in the market taking the heat out of it resulting in a significant revaluation of all crypto asset classes.
Also, this year saw many companies and regulators transacting in cryptocurrency pointing towards greater adoption of the digital currency class as a legal store of value in the future.
Developments
According to Block.one President Rob Jesudason the launch of the Gemini dollar stablecoin by Gemini is a notable step towards legitimizing the store of value capabilities. The new coin is supervised and regulated by the New York Department of Financial Services (NYDFS) dubbed ‘Crypto’s toughest regulatory regime.’ It joins Paxos‘ stablecoin that is also regulated by NYDFS.
According to one November 16 Financial Times headline, stablecoins are the next big investment opportunities in the crypto world. The development will eventually attract more institutional investors in the market.
Exchanges
Exchanges are also gaining ground. Leading the group is Coinbase which has displayed excellent security standards. The exchange company accelerated the adoption of cryptos by institutions through the acquisition of Keystone Capital.
They are also introducing professional-grade trading tools for institutional investors. After its latest funding in October, the company was valued at $8 billion dollars.
Positive indicators are evident in financial institutions. They are taking the crypto market seriously. Fidelity Investments has announced that they will launch Fidelity Digital Assets Services (FDAS) to direct sizeable demands from customers into crypto assets.
Goldman Sachs is the first bank that set up a digital assets trading operation. Others like Morgan Stanley and JP Morgan are planning to follow suit. Additionally, an increasing number of institutions are diving in as structural adoption barriers crumble.
Regulation is gradually bringing transparency and clarity to the crypto market.
Custody and liquidity matters are also getting addressed. FDAS will offer ‘asset custody’ services for the institutions while The Intercontinental Exchange and Goldman Sachs have proposed solutions too.
Concerns
Critics tend to forget that corrections follow all financial markets’ price booms and the crypto market is not an exception.
Furthermore, the latest declines in the cryptocurrency markets are mirrored in many other asset markets. The fact remains that the 2018 price volatility has experienced considerable impact from the geopolitical and macroeconomic backdrop compounding on the asset-specific concerns.
The US-China trade war and the looming US Federal Reserve interest hikes are causing major uncertainty causing volatility. Previous market corrections took several years. For example, the current tech giants like Facebook, Microsoft, Amazon, and Alphabet took years to establish themselves after the dot-com crash.
The stock market gained a consistent bull run years after the 2008 financial crash. Biotech and internet companies are emerging as the best performers since 2008.
The Takeaway
Key industries and companies always withstand macroeconomic volatility. At the point of any market crash, great companies emerge. Investors focus on these enduring industries propelling them to become global leaders.
Currently, blockchain technology and the cryptocurrency markets are among the emerging lucrative industries globally.
The new technology’s potential to greatly revolutionize digital commerce, protect identity and enhance security has attracted many investors. But, uncertainty still remains on how the technology will get incorporated into daily lives and also get regulated perfectly to allow it to grow.
Any company that will offer viable solutions to the adoption questions and coexists with the regulators is bound to succeed. Various companies have developed infrastructure that is set to put blockchain technology in an upward trajectory.
These are some of the notable developments that got overshadowed by the major focus on crypto values.
