Many people have different arguments regarding the value of cryptocurrency due to which the market of cryptocurrency is bearing a downfall. Public opinion crisis and the fact that crypto isn’t backed by anything coupled with many other reasons are causing significant growth pain for crypto market. However, a major market shift can be expected if the cryptocurrency investors, regulators and entrepreneurs address the following reasons of cryptocurrency market downfall:
Evasive ways of making money in crypto market
Initially, the adopters of cryptocurreny either financed on ICOs (Initial coin offerrings) by receiving early in and getting out by day trading or holding and mining cryptocurrency for longer periods of time. Bitcoin mining has become more competitive and evasive in today’s investment climate. Day trading has become more onerous and unpredictable.
However, this doesn’t mean it’s the end of cryptocurrency market. By adopting innovative ways for investors to make money, crypto can be back on the growth ladder progressively.
Viewing cryptocurrency as short-term investment
Regardless the growth and popularity of crypto market, many investors consider it as a short-term investment. They do not include cryptocurrency in their retirement plans as they tend to have a quick return. The crypto market is getting volatile because of the continuous motion of getting in and out by everyone.
Obstructed regulations by SEC
Due to regulatory uncertainty by SEC rules, crypto market has been lacking the blare it should have. In 2018, cryptocurrency companies and exchange markets were fined by SEC to launch ICOs as SEC misinterpreted security tokens with utility tokens. Also, since the summer of 2018, crypto market has been facing many challenges as SEC denied nine Bitcoin ETFs and delayed the review of tenth to date hence affecting the legalization of crypto market.
If the legalization matter is solved regarding cryptocurrency ETFs, more investors and companies will be inclined towards investing in crypto market. Thereby, providing it more stability on a large investment scale.
The security of cryptocurrency market has always been a glaring issue since a lot of bad press for scammers and hacks have emerged. Some investors consider ICOs as fraud and hence doubt the reliability of crypto market. The faltering cryptocurrency exchange security remains a conspicuous topic since long. This is because it is lot easier thing to do to steal funds from exchanges rather than banks. Despite the fact that exchanges cannot be trusted across the board, there are many other secure options to be incorporated.
Lack of liquidity intercepts pervasive adoption
Increased and expanded liquidity would mean cheaper and easier transactions, price stability and more confidence of investor. Thereby, preventing the manipulation of cryptocurrency prices by large buys of Bitcoin whales. The widespread adoption of cryptocurrencies is hindered because of lack of liquidity and people have limited transactions to techies and cyberpunks.
Even though cryptocurreny adoption is rising, exchanges do not have sufficient liquidity to provide comfortability to their investors and ease the conversion of cryptocurrencies without demanding to pay steep transaction fees.
Regulation is just beginning
One of the greatest advantage and also the biggest problem for cryptocurrency is the fact that it’s brand new. Different regulation methods have to be figured out for its betterment.
Despite these and many other reasons of downfall, once exchanges provide sufficient security and liquidity to investors and gets standardized, it will attract more people to invest in cryptocurrencies and bring back its continuation on growth ladder. As it attains the stability in the market, it will allow the investors to invest and diversify their portfolios without the worry of losing everything.
Editor of IMD News