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Crypto Industry: Is It Dead?
09/06/2023

Crypto Industry: Is It Dead?

09/06/2023
4,5

Some people say that Bitcoin will be worth $100k+, while others say that Crypto is dying. Let us determine who is wrong and who is right.

Crypto Industry: What’s Happening to It Now?

The crypto industry has been a roller coaster ride for investors and enthusiasts. Over the past few months, the industry has seen many ups and downs, with events that have left many wonders about the future of cryptocurrencies.Some people say that Bitcoin will be worth $100k+, while others say that Crypto is dying. Let us determine who is wrong and who is right.

The crypto industry has experienced several significant events in the past few months. The Securities and Exchange Commission (SEC) in the United States filed lawsuits against Binance and Coinbase, causing panic in the crypto market. Investors withdrew a net total of $2.36 billion from Binance and $1.79 billion from Coinbase within seven days of the lawsuits being filed.

In addition, the IRS considers mining income taxable, and miners must report their earnings on their tax returns. These events have had a significant impact on the cryptocurrency industry, and their effects are still being felt. Lawsuits have caused investors to lose confidence in the cryptocurrency market, and the net outflow of assets has been significant. The crypto market’s volatility has been highlighted once again, but despite these events, the crypto industry has continued to grow. Many companies and institutions have started to invest in cryptocurrencies, and some have even begun to accept them as a form of payment. This has led to increased adoption of cryptocurrencies and helped legitimize the industry.

Therefore, is cryptocurrency living or dying? The answer is not simple. Although the industry has faced significant challenges, it has also seen significant growth and adoption. The future of cryptocurrencies depends on how the industry addresses its challenges and adapts to changing market conditions. The past few months have left many wonders about the future of cryptocurrencies. While the industry has faced significant challenges, it has also seen significant growth and adoption. The future of cryptocurrencies remains uncertain, but one thing is clear: the cryptocurrencies industry is here to stay.

Is it Crypto Winter Now?

The term "crypto winter" refers to the time when the cryptocurrency market experiences a prolonged period of price weakness. The crypto winter of 2022 began in May and was characterized by a significant decrease in the value of cryptocurrencies and the collapse of some major crypto projects.  Some experts have said that the ferocity and scale of this downturn could lead to an increase in the ice age.

Therefore, is it currently crypto-winter? Yes, it is. The cryptocurrency industry is currently experiencing a period of significant decline, with a cryptocurrency price crash.

5 years BTC chart. Source and Copyright: © Tradingview

Even small shocks contribute to negative sentiment and panic; however, it is important to note that the crypto industry has faced significant challenges in the past and has always managed to bounce back. While the current crypto winter is severe, industry participants are confident that the spring is coming. The future of cryptocurrencies depends on how the industry overcomes its challenges and adapts to changing market conditions.

Crypto companies and crypto market

Despite all that we have already said, some positive things happened. For example:

  • Coinbase and BlackRock partnered to give 50,000 institutional investors access to cryptocurrency assets;
  • A consortium of major brokers, market makers, and venture capital firms announced the creation of a new crypto-exchange;
  • BNY Mellon, the oldest U.S. bank, launched a digital asset-storage platform.

After Q2, the crypto market partially recovered in Q3: capitalization grew by 4%, reaching almost $935 billion, and 3-month trading volume grew by 16%. At the same time, according to the Q3 results, we notice an interesting trend - throughout the quarter, the level of correlation between the crypto market and the S&P 500 decreased, and the latter showed negative dynamics. It is possible that cryptocurrencies are beginning to show signs of a protective asset, decoupling from traditional markets.

Source and Copyright: © Tradingview

The NFT industry continued its decline in Q3, reaching a trading volume of $0.4 billion in September, compared to $0.8 billion in July and a peak of $14 billion in January 2022. The DeFi industry grew by 7.5% to $77 billion by the end of Q3, which is still below the peak of $230 billion by the end of 2021. The GameFi sector showed conflicting signals in the third quarter, with the capitalization of projects increasing by 11%, but the number of daily users decreasing by almost 40%. The long-term outlook for the GameFi sector is optimistic, with the sector expected to grow by almost 25% per year during the 2020s, which is significantly higher than the traditional gaming market. Despite the challenges faced by the crypto market, the Bank of America has revealed its bullish outlook on DeFi and NFTs, and the continued popularity of NFTs is expected to depend heavily on the success of meta-universes.

In the third quarter of 2023, the crypto market was facing a challenging macro environment that could dampen Bitcoin’s upside. The rush to get a spot Bitcoin ETF approved came at the height of the SEC’s hostility toward crypto, and many are hoping institutions such as BlackRock, Fidelity, and Invesco can force some change.

However, regulatory entanglements should continue to be at the forefront of the cryptocurrency industry's attention because of their impact on exchanges, the U.S. cryptocurrency market, innovation, the banking industry's willingness to bank crypto companies, and users' ability to access digital assets. Institutional investment is likely to remain constrained until regulatory clarity is achieved.

How do the SEC and other regulators affect the crypto market?

Regulators also show an increased interest in digital assets in the third quarter. The first major event that set the trend for Q3 was the shutdown of the Tornado Cash Service, which specializes in improving the privacy of transactions and the inclusion of related accounts in the U.S. Treasury Department's sanctions list and the arrest of the mixer's founder, Alexey Pertsev, in the Netherlands. Later, in September, the White House unveiled its own vision for the crypto market, which proclaimed a course towards regulation but also expressed a desire to find a compromise between regulators and investors. In October, the heads of the SEC and CFTC threatened crypto exchanges with enforcement actions and called for the legal status of cryptocurrencies to be resolved as soon as possible. Cryptocurrencies were defended by Republicans, who offered them temporary protection from enforcement actions until the issue of market regulation was resolved, and the SEC and CFTC's demands were met. The likely Republican victory in midterm congressional elections is a good signal for crypto exchanges. In general, it is already obvious that the issue of crypto-market regulation has entered the mainstream, and doubts may only be in its pace and conditions for players.

Is Mining Dead?

In recent years, the mining industry has undergone significant change. The mining industry has become more competitive with large mining farms dominating the market. The cost of mining has increased owing to the rising price of electricity and the need for expensive mining equipment, and some countries have banned or restricted mining activities. Individual mining has also become less profitable because of increased competition and costs.

Despite these challenges, the mining industry is still alive and some individuals and companies continue to profit from it. However, the industry is constantly evolving, and it is difficult to predict the future. The recent actions of the SEC against Binance and Coinbase have caused panic in the cryptocurrency market, and the net outflow of assets from Binance and Coinbase has been significant. However, it remains to be seen how this will affect the mining industry in the long term.

Summary

Based on the results of the third quarter, we can highlight the main trends of the crypto market - its "decoupling" from stock indices, institutionalization, and increased regulation. At the same time, all these trends are positive signals and testify to the "maturation" of the market and its new stage of development.

The future of cryptocurrencies remains uncertain, and the industry's challenges and ability to adapt to changing market conditions determine its future. The mining industry has become more competitive, with large mining farms dominating the market, and individual mining has become less profitable owing to increased competition and rising costs. 

The cryptocurrency market is currently experiencing a period of significant decline, with the prices crash, and the regulatory entanglements should continue to be the front and center of the cryptocurrency industry's attention due to their impact on exchanges, the U.S. cryptocurrency market, innovation, the banking industry's willingness to bank cryptocurrency companies, and users' ability to access digital assets. The future of cryptocurrencies will depend on how the industry overcomes its challenges and adapts to changing market conditions.

F.A.Q

 Is the cryptocurrency market dead?

The cryptocurrency market is not dead. Despite facing significant challenges, the industry has continued to grow, with many companies and institutions investing in cryptocurrencies and accepting them as a form of payment.

Does crypto have a future?

The future of cryptocurrencies will depend on how the industry addresses its challenges and adapts to changing market  conditions.

Is crypto dying 2023?

No, it isn’t. Although the crypto market is currently experiencing a period of significant decline, industry participants are confident that spring is coming.

Will crypto grow again?

Nobody knows for sure. However, the potential for a resurgence in the crypto market remains ever-present.  

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The materials found on the Cryptonica website shall not be taken as individual investment recommendations. The financial instruments or operations mentioned therein may not align with your investment profile or objectives. We assume no responsibility for any missing facts or inaccurate information in the texts. Cryptocurrencies are financial assets with high risk and volatility. Therefore, it is crucial that you conduct your own research on financial instruments and make independent decisions. Before engaging in any actions related to cryptocurrency, you shall study, understand, and comply with the laws applicable in your region and country.

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