It’s no secret that the cryptocurrency market has taken a hit these past several months. It’s lost more than $1 trillion in value since November 2021, with Bitcoin falling from a high of near $70,000 to below $30,000 – its lowest level in two years.
Given crypto’s reputation for disrupting the status quo, it’s perhaps not surprising that expert predictions regarding the future of the industry vary widely; some are convinced of further collapse while others foresee noteworthy rallies. Even for an asset class known for its volatility, the recent market turmoil has left some investors questioning crypto’s legitimacy altogether.
Many, though, are continuing to treat cryptocurrency as they have for a long time: a long-term growth asset. Part of their optimism stems from crypto’s continued widespread adoption. For instance, as this article states, most major banks have created “digital asset teams” and continue to staff them up. Furthermore, there’s been a huge “brain drain” from both big finance and big tech into crypto startups; in the past year, many Wall Street executives and traditional financial professionals have left their positions to join crypto.
Cathie Wood, CEO and CIO of Ark Invest – an investment firm that focuses on disruptive technologies and innovation – believes the crypto bear market is “close to an end.” According to this article from MSN, she foresees an end to the hawkish moves from the federal reserve and believes the correlation with stocks is an exception to the rule.
These sentiments were echoed by macro investor Raoul Pal, who points to the high interest rates and fear of an upcoming recession as the main factors that are causing the current market, according to an interview with Cointelegraph. He eventually predicts another crypto rally once the Fed eases its monetary policy.
Minecheck's own Kyle Sidles is not overly concerned. "I experienced the dips in 2014 and 2018, which had some similarities to what we are currently witnessing," he said. "With that said, we have to remember that blockchain technology and the cryptocurrency industry is still in its infancy. The internet in 1996 was a whole different ball game than the internet we use today, and I am still very confident that the world will benefit greatly from the foundation of blockchain technology, just as the world has benefited greatly from the internet."
Cryptocurrency market projections are still looking favorable. A report released this week from ResearchAndMarkets predicts the global cryptocurrency market will reach $32,420 billion by 2027, exhibiting a compound annual growth rate (CAGR) of 58.4 percent during 2022-2027.
“Increasing digitization across industries represents one of the key factors driving the growth of the market,” the report states. “In line with this, easy accessibility to and rising penetration of high-speed internet connectivity in daily activities is also creating a positive outlook for the market. Furthermore, legalization and approval of purchase, sale or trade of virtual currencies in various developed countries are also driving the market growth.”
The report also notes that other factors, such as growing market capitalization or market cap of the industry, along with the advent of bitcoin cash and bitcoin lite, are anticipated to further drive the market.
But if all of that still doesn’t instill much confidence in the crypto market, consider this: venture firm Andreessen Horowitz (a16z) announced this week that its crypto unit has raised $4.5 billion for its fourth crypto fund, doubling the size of its last. The firm plans to allocate $1.5 billion of the funds to make seed investments in Web 3.0, and $3 billion to make more traditional startup investments. The fund is the largest individual crypto fund raised in venture capital so far, bringing its total funds raised to more than $7.6 billion.
When asked whether the market’s current condition will scare traditional firms away from continuing their crypto bets, a16z’s Arianna Simpson told TechCrunch that “it’s likely other firms will pull back,” but that “the size of our new fund speaks to the level of excitement and belief we have in this category.”