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According to Jonathan Cheesman, partner of the investment company Distributed Global, Bitcoin fell due to five main reasons: macro trend, speculative domination, regulatory uncertainty, short selling and frauds.
as the market and cryptocurrencies as asset classes continue to see improvements in infrastructure and regulation, Cheesman explained that a growing number of investors will recognize cryptocurrencies as solid and legitimate value reserves.
He said:
"For some, things are even more acute now – Venezuela and Turkey are the most obvious examples – and debt sustainability is a real risk for many legal currencies. value global gold has had a purpose, but it is archaic.A valuable digital archive is both more practical and more in touch with the growing millennial generation. "
Regulatory uncertainty and weak infrastructure
Until 2018, the infrastructure for institutional investors and large retailers was virtually non-existent. The last barrier between institutional investors and the cryptocurrency market that is custodian has not been eliminated and there were very few publicly tradable instruments that could facilitate the cryptocurrency demand from accredited investors.
The weakness of existing infrastructures together with the regulatory uncertainty on cryptocurrencies prevent large sums of capital flowing from the wider financial market to the cryptocurrency sector.
Thus, the speculative bubble of the cryptocurrency market in 2018 was similar to that of the previous bubbles in 2012 and 2016 as the current correction was initiated by the sale of panic initiated by speculators and individual investors on the market.
The correction of 80% of the cryptocurrency market has occurred in a similar way to the previous decreases, but the expected recovery of the market will differ drastically from previous attempts.
In the past, Bitcoin had failed to boost maj or support levels and showed no signs of recovery for over two years. This year Bitcoin made three attempts to exit the $ 6,000 support level and, although they did not succeed, Bitcoin did not fall significantly below the $ 6,000 support level.
But as regulatory frameworks and trusted custody solutions in cryptocurrency the market continues to improve, more institutions will be willing to take a big risk to engage in a market that is in its early stages.
Cheesman wrote:
"Regulators around the world have struggled over responsibly the police encryption.A decentralized movement poses many complications in the classification of assets and bad actors that cloud the water. As a result, things have moved quite gradually, but the general regulators have taken a tone that demonstrates that they respect potential innovation.The regulatory uncertainty has in turn slowed down institutional investors, as well as the lack of custody solutions, insurance, data and risk management. "
Progress in South Korea and Japan
Already, South Korea and Japan have introduced cryptocurrency and blockchain-related legislation to govern crypto and blockchain industries as legitimate sectors.
On September 8, CCN reported that the Government of Uzbekistan has decided to legalize the trade in cryptocurrencies, the first offers of coins (ICO) and digital mining.
As billionaire Investor Mike Novogratz said earlier, it is entirely possible that the next long-term cryptocurrency rally will be led by institutions such as pension funds and hedge funds, given that solid custody solutions will likely see # 39; adoption in the coming months.
Close-up image of Shutterstock. TradingView Charts.
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