The crypto market is likely to recover due to the factors that cause the tilt. If the inflow of regular funds increases, the risk of cryptocurrencies will weaken. Stablecoins achieve the same effect by allowing cryptographic functionality while limiting volatility. These will also improve the adoption of cryptocurrencies. Ultimately, cryptocurrencies have the potential to transform from an asset class to a currency. The evolutionary path will therefore be clearly defined from a regulatory perspective. Speculative elements in crypto trading need to fit a risk-reward trade-off that is acceptable to the broader financial market.
Virtual currencies need to be regulated for financial stability and cybersecurity. This must be a coordinated effort, as globalized threats to financial markets and cybersecurity are interconnected. The crypto market should benefit from deepening with the presence of institutions. Swift enforcement action in the event of manipulation also diminishes the wild west quotient of cryptocurrencies. As financial structures become decentralized and regulators step up risk mitigation, cryptocurrencies are becoming a store of value. The rollercoaster ride that crypto investors are accustomed to may lose some of its intensity, which is a good thing for the world’s youngest asset class.
