Crypto prices have been declining recently, making many in the crypto investing community, well, a little nervous.
Yet, new cryptocurrency projects are still entering the market, and some positive signs are pointing to long-term growth.
Here’s a wrapup of stories to help guide cryptocurrency investment.
1. Declining Prices Unnerve Some Cryptocurrency Investors
The cryptocurrency industry began during the recession of 2008, so the concept of recession isn’t new to the industry. This time, the cryptocurrency market has been experiencing significant price growth, primarily fueled by investor FOMO (fear of mission out.) Now, cryptocurrency investments, like many traditional investments, are in a bear market, and investors are nervous.
It’s been a tough time for crypto traders, especially beginner investors, says Claire Ballentine, a Bloomberg reporter. She says this is the first time they’ve seen a significant decline. People are grappling with whether to hold onto virtual currencies or sell, she said.
Complicating the decision further is that, unlike traditional currencies, cryptocurrency has a community built around it. Investors experience peer pressure to stay in. In fact, many investors have built their online identity around crypto. Determining a good investment is also very nuanced in the crypto industry, she says. Economic pressures like higher gas, grocery, and housing prices, Ballentine says, may force some investors to sell at a loss even if they don’t want to.
2. Three Signs that the Cryptocurrency Market Will Grow
Despite the recent drops in cryptocurrency prices, Stuart Popejoy, co-founder, and CEO of Kadena, believes cryptocurrency markets are poised for growth. He told Nasdaq that he sees three signals that the market is growing.
The first signal is that top talent is moving out of major companies in the tech industry, such as Amazon and Apple, to work for crypto firms. Previously, only cryptographers and similar specialists were working in the cryptocurrency industry. The second signal is that institutions are increasingly funding crypto projects. Crypto raised about $25 billion last year. The third is that more and more individuals are beginning to invest in cryptocurrency.
For example, mainstream investors can buy Bitcoin through Fidelity 401(k) mutual funds. Only significant cryptocurrencies such as Bitcoin and Ethereum are part of this trend. Still, Popejoy believes the trend eventually will extend to other crypto assets such as blockchain companies, non-fungible tokens (NFTs), and altcoins other than ETHER.
3. Central Bankers Grapple With Balancing Opportunity With Regulation of Digital Currencies
Central bankers, particularly members of the Group of 20, praise blockchain technology while also admitting uncertainties about the long-term safety of investing in digital assets without a regulatory framework in place.
“Private backed money can work for a while, but it usually ends in disaster,” Philip Lowe, a Royal Bank of Australia governor, told Bloomberg. G-20 central bank leaders say that digital finance is a priority. However, they recognize that any regulation will require global coordination to be effective. Issues the group would like to tackle are anti-money laundering, data privacy, ensuring liquidity, and offering incentives for institutions to switch from traditional assets.
4. Senators Request NFT Intellectual Property Study
U.S. Sens. Patrick Leahy and Thom Tillis have asked the Patent and Trademark Office and Copyright Office to study how the technology surrounding digital assets fits with U.S. intellectual property laws.
The study request comes in light of recent lawsuits around the creation, dissemination, and ownership of NFTs. The study aims to clarify patent eligibility for crypto-based inventions, trademark and copyright issues in secondary crypto markets, and copyright in Metaverse worlds. Lawyers and other legal experts have different opinions about whether new legislation is needed or whether current legislation is sufficient.
5. U.S. News and World Report Names the Seven Best Cryptocurrency Exchanges
Digital assets are making their way into investor portfolios alongside traditional stock market assets. Investors access, buy and sell cryptocurrency assets via exchanges. Here is a list of the best crypto exchanges, according to U.S. News and World Report.
Coinbase has been around since 2012 and has more than 98 million users. It is user-friendly and offers free Bitcoin rewards for opening an account. Coinbase Pro, for more experienced investors, offers advanced cryptocurrency data and investing tools.
Robinhood is a retail investment platform with a crypto investing feature. The exchange hosts several currencies, including Bitcoin, Ether, Dogecoin, and Ethereum Classic. It offers fee-free trading, ease of use, and low barriers to entry.
Binance is the largest exchange, with more than 500 crypto and fiat currency pairs. It provides access to almost all digital currencies. U.S. users go to the regulated Binance US exchange. It provides low or no fees and charting tools.
Gemini is a regulated exchange founded in 2014. The primary currencies are Ether and Bitcoin; however, more than 70 cryptocurrencies and several fiat-backed stablecoins are available. Security is a high priority, and the company ensures any crypto held in its wallets.
FTX also is regulated. It has about 1 million users and allows futures and margin trading. Investors receive a discount on trading fees if they hold and stake the exchange’s native cryptocurrency, FTT. The more FTT an investor holds, the greater the discount.
Cryptocom lets users trade more than 250 crypto and 20 fiat currencies and accepts debit and credit cards. Users receive discounted trading fees as their trade volume increases. Cryptocom also has a lending platform.
Founded in 2011, Kraken has basic features for new investors and advanced tools for experienced virtual currency investors. It has a low barrier to entry and offers access to 65 currencies. It is friendly to institutional investors, including brokers, family offices, and high-frequency traders.
6. Auction Firm Launches Web3 and Blockchain Venture Fund
The international auction house Christie’s has launched an investment fund to support emerging technologies. The firm, named Christie’s Ventures, will help firms in Web 3, art-related financial products and solutions, and technology related to art and luxury goods.
According to Coin Telegraph, Christie’s Ventures’ first investment is in LayerZero Labs, which is seeking to enable omnichain decentralized applications.
7. Web3 Dominates Venture Capital Interest
Web3 garnered 42 percent of investment dollars in the second quarter of 2022, according to an analysis in Coin Telegraph. The DeFi sector was a distant second, receiving 16 percent. Seven out of 10 of the most active venture capital investors chose the Web3 sector, the analysis said.
One of the largest deals was $2 billion for Epic Games to combine sports experiences and the crypto-Metaverse.
8. Northern Virginia County Invests Retirement Funds in Crypto Space
Fairfax County, in Northern Virginia, continues to invest in cryptocurrency projects. The county will invest $35 million of its public employee retirement funds into Van Eck’s Crypto Lending Fund.
Andy Spellar, the chief investment officer of the Fairfax Employees’ Retirement System, told Coin Telegraph that he looks at the space as a way to diversify its investments. The investment, says Spellar, is particularly effective over short terms, such as one to three months.
9. Crypto Market Capitalization Soars Back Above $1 Trillion
The total crypto market capitalization soared to about $1 trillion again on July 18. Both Bitcoin and Ethereum added market cap value. The mid-July surge was the first time the market cap was more than $1 trillion since June 13.
10. Professional Investors May Be Warming to Ether Again
Ether-based projects saw investor funds flowing in for the third week in a row, according to Coinshares’ digital asset funds weekly report on July 11. Funds for Bitcoin-related projects, however, continued to outflow.
“The inflows suggest a modest turnaround in sentiment, having endured 11 consecutive weeks of outflows,” the report says. It added that the turnaround might be because of the impending Merge, where the Ethereum blockchain platform moves from Proof of Work to Proof of Stake to validate transactions. Ether is the native currency on the platform.
11. Gemini Lays off 10 Percent of Staff
The cryptocurrency exchange Gemini has laid off 10 percent of its staff because of market volatility. A source told Tech Crunch that the layoffs were an example of “extreme cost-cutting.” The new round of layoffs is Gemini’s second in two months.
Other crypto companies also have been cutting staff, including Open Sea, Cryto.com, Coinbase, and Bybit.
12. Most Investors in Crypto Assets HODL
A recent survey shows that 55 percent of crypto investors have opted to Hold On for Dear Life rather than sell their assets. The digital markets are currently in a period of high volatility. According to Coin Telegraph, few on-the-spot reasons encourage investors to purchase crypto. Numerous DeFi protocols and crypto investment funds have collapsed. Yet, according to the survey, only about 8 percent of digital currency investors have sold off.
The survey found that 68 percent of investors across all asset classes hold onto their investments. It also found that about one-third of American investors own crypto assets.
13. Celsius Collapse is Taking Investors With It
Major crypto lender Celsius has filed for bankruptcy, saying it owes users about $4.7 billion. Celsius is managing about $12 billion in digital assets and has about $8 billion in client loans, according to CNBC. The firm has about $167 million in cash on hand, which it says will provide liquidity during a restructuring.
Celsius has more than 100 creditors. In bankruptcy, creditors will receive their money first before investors. As part of filing the petition, the company has halted account activity, meaning users will be unable to access their digital cash.
The former Commodities Futures Trading Commission Chief J. Christoper Giancarlo told Coindesk that the company’s bankruptcy hearing could help articulate how future bankruptcies in the crypto ecosystem are handled.
Celsius is the third major crypto bankruptcy within two weeks, said CNBC, and the collapses indicate that the days of crypto investors netting double-digit annual returns are over.
14. Judge Freezes Three Arrows Capital’s Assets
A federal judge in bankruptcy court in New York has frozen the assets of Three Arrows Capital, a crypto hedge fund. The firm has filed for bankruptcy, and its three founders are in hiding. Before the bankruptcy filing, a judge in the British Virgin Islands had ordered the liquidation of the almost 10-year-old firm to pay debts, according to CNBC.
The judge also gave Teneo, the firm managing the liquidation, the right to subpoena the founders and representatives of other institutions that have done business with the firm.
15. Some Digital Asset Protocols May Face Operating Difficulties
As crypto prices continue to fall, some protocols may have difficulty operating because their own tokens dominate their treasuries, Meltem Demirors, chief strategy officer at CoinShares, told MarketWatch. Tokens for some of the protocols are down 90 percent to 95 percent. The protocols, says Demirors, will not be able to sell the virtual currency either.
Many crypto projects are not able to survive the downward turn. Tarun Gupta, chief executive at Coinshift, told MarketWatch that auditing might be required for future large projects.
16. Ask Yourself These Questions Before Putting Digital Assets in Your 401(k)
Fidelity announced in April that it would offer employers the option of including crypto in its sponsored retirement plans. Currently, the number of employers offering the virtual currency investment option is still low; however, it may grow in the future. Just as with any investment, investors should avoid making decisions based on trends, coolness, or emotions. According to Kiplinger, investors should ask questions to see whether buying cryptocurrency fits with the overall investment strategy.
The questions to ask are:
- The obvious: is the option available in my employers’ plan?
- What is my motivation? You should at least understand cryptocurrency and how it fits with your investment objectives.
- If you want to invest, is the 401(k) the best place to hold cryptocurrency?
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