3. More Regulation for Cryptocurrencies is Welcome News
- Investors are surprisingly saying they’re more likely to buy into cryptocurrencies following greater enforcement action, at least according to the MLIV Pulse survey.
- According to the latest survey, most investors were slightly more optimistic about cryptocurrencies than when they were asked in July.
In the latest MLIV Pulse survey, almost 60% of the 564 respondents viewed the recent spate of legal action in the embattled cryptocurrency sector as a positive sign for the asset class, whose trademark volatility has all but dissipated in recent months.
Investors are surprisingly saying they’re more likely to buy into cryptocurrencies following greater enforcement action, at least according to the MLIV Pulse survey.
A crackdown by the U.S. Securities and Exchange Commission and other watchdogs who have been investigating companies such as Three Arrows Capital, Celsius Network, as well as Yuga Labs, is providing an unexpected boon for the industry.
Professional investors think that the more regulators can get cryptocurrencies out of the “Wild West” and into more mainstream channels, the better off it's going to be as they do need a regulated investment opportunity to get involved in the sector.
According to the latest survey, most investors were slightly more optimistic about cryptocurrencies than when they were asked in July.
Almost half of all respondents expect Bitcoin, the world’s largest cryptocurrency by market value, to continue trading between US$17,600 and US$25,000 until the end of this year, a relatively large range, but well within market expectations.
Since March, Bitcoin has held a strong correlation to risk-on assets such as the S&P 500, barely changing its position in the last three months as investors painted cryptocurrencies with the same brush as everything else in an environment of rising interest rates.
Some 42% of respondents said they think crypto’s correlation with tech stocks will stay the same over the next 12 months, while only 43% said they would increase their exposure to digital assets over the same period.
It has been chaos for crypto in 2022 with the bankruptcies of Voyager Digital and the US$40 billion wipeout of the Terra blockchain ecosystem shaking confidence.
Roughly US$2 trillion in overall value was erased from the industry’s late-2021 record.
Nevertheless, investment into the cryptocurrency space continues unabated, on expectations that early bets now could help investors discover the Facebooks, Googles and Amazons of the future.
Many technologists believe that cryptocurrencies and the blockchain technology that underpins them could form the basis of so-called “web3” or the “internet of value” where transactions go beyond interactions and extend to involve the very underlying technology of the blockchain.
The soaring U.S. dollar has also provided food for thought for many investors, who are wondering if the stronger greenback could be responsible for depressed cryptocurrency prices that would rebound sharply if and when the dollar moderates.
More financial institutions are also keen to offer cryptocurrencies to investors, given the demand and though once skeptical, many appear to be coming onboard.