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Is crypto dead? In my relatively brief analysis, I will attempt to answer a couple of questions currently "hot" in the crypto market. Some have been with us for a while, and some are just now becoming a theme. These are:
In a sense, the questions almost answer themselves. But let's start from the start.
FTX collapses, regulators "take a look"
The tale and specter of some kind of broad crypto regulation is as old as the market itself. There is a consensus that it's probably going to come around in 2023. But what is going to come, exactly?
It only takes you two seconds to find a match for a query pertaining to how FTX's collapse is going to bring on crypto regulation. So far, we've had...
Yet the market has not changed, certainly in the case of Bitcoin. Tellingly, the chief of Russia's policy on crypto finds the asset class impossible to regulate and therefore wants to ban it.
The more we delve into the prospect of possible crypto regulation, the more we have to entertain the idea that it is a fallacious concept. Crypto was meant to be law-resistant, in a sense, because laws are what sprung it to place to begin with.
The financial crisis of 2008, government bailouts of banks, all that. So crypto being prone to the kind of regulation some seem to fantasize of would sort of invalidate its use case.
The Securities and Exchange Commission has bewilderingly received criticism that it's doing "slap-on-wrist" regulation of companies instead of issuing a broad framework. The SEC and similar bodies can only hope to regulate companies dealing in crypto, not crypto itself. This is a very important distinction that is almost uniformly overlooked.
Perhaps due to their convenience, exchanges have kind of crept up on us in what is supposed to be a peer-to-peer system. The same can be said of practically any other crypto firm, whether brokerage or custody.
It's wholly understandable that big money wants big insurance, but, in theory, cryptocurrencies aren't designed to serve big money. So to actually clamp down on crypto activity, the Bitcoin network itself would have to falter.
2022: Another year of "Is crypto dead?" headlines
Crypto assets have a somewhat unique position, and it's not exactly one to be happy about. No other asset class enters a bear market, as is the natural part of market cycle, only to be proclaimed dead.
Why does this happen? As I'll soon elaborate, crypto investors are unique, too. There are many different categories with different levels of risk tolerance. And while in other markets this merely translates to entries and exits, then entries again, digital assets take it to another extreme.
Every time things turn bearish, crypto is dead. And every time we get a bull run, crypto is not dead and blockchain technology is the best thing ever. The more time you've spent in the market, the more you'll be familiar with these extreme swings in sentiments.
Why this relates to the article has primarily to do with how much Bitcoin dominates the markets, partly due to market cap. For all the stablecoins, altcoins and even NFTs, the times when other tokens decoupled from Bitcoin were few and far between.
We might have reached a point where we should start wondering why no token seems to be able to gain any kind of independence but moves accordingly with and is priced in Bitcoin. Perhaps the comparisons with gold have gone too far?
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Bitcoin remains resilient, to the surprise of nobody
No price changes, use increases, exchange collapses, crypto obituaries or anything of the sort have put the slightest dent in a core facet of the crypto market. And that is the Bitcoin network running smoothly.
For crypto to truly be threatened, the Bitcoin network itself would have to come under a concentrated attack. If it was easy to do, it would have probably been done already. That's not to say Bitcoin can't or won't go down.
This year's Ethereum developments have perhaps taught many a investor a valuable lesson. You can't hope for a cryptocurrency to overtake Bitcoin if it's run by a team of people with agendas. Bitcoin's primary appeal is that it helps one battle back against teams of people with agendas.
So in order for Bitcoin to be overtaken, destroyed, killed or what have you, a truly superior cryptocurrency would have to take its place. More decentralized, more private, more resilient. And that's why we are perhaps about to witness an exciting year or two in the crypto market.
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2023 and 2024: Make or break or fanfare?
The older a Bitcoin investor is in regards to market tenure, the more they can relate to the title of this article. If you entered crypto last year, or this year, FTX's collapse and various insolvency talks are probably a huge deal for you. If you entered it in 2017, and certainly 2015 and before, it's nothing but FUD.
Still, a distinction needs to be made. 2023 and 2024 represent the years where governments are most likely to try and exert some kind of authority over the crypto market.
This over-reach will, not coincidentally, coincide with the planned introduction of CBDCs. The latter alone tells even the most experienced crypto investor that this isn't just another round of FUD.
Despite what sentiment suggests, whatever happens to crypto is going to be good. Crypto must be resilient. It must be private. And it must be decentralized.
Any token that can't maintain this, even amid seemingly insurmountable odds, is no cryptocurrency. So if Bitcoin is dethroned, it will only be a form of natural selection.
You might not be a fan of that term, but it has its uses. And if it is dethroned, I estimate it will take roughly one second for another to take its place.
Is Bitcoin Dead?
Regulating ideas? A little harder...
In a sense, some might argue that Bitcoin has already fulfilled its purpose. It introduced the concept of decentralized finance to everyone. The people now know that this is doable, and easily so.
Others might argue that we're already seeing chips in Bitcoin's armor. Many have taken to Monero as of late, with it supposedly having better privacy properties.
The amount of institutional money in Bitcoin pretty much affirms it isn't going anywhere. However, its shape and role could be redefined down the line.
The important takeaway in all of this is that other cryptocurrencies with other networks will spring up, exist and remain. Decentralized finance can do nothing but proliferate from this point onwards.
So however you feel about the tremors we seem to be feeling heading into the next two years, they will be some of the most exciting ones in the cryptocurrency market. And I'd venture to say crypto will, for all intents and purposes, emerge unscathed.
