According to CCN, Jonathan Cheesman, a partner at investment company Distributed Global, said there are five main reasons for the decline in Bitcoin: macro trends, speculative lead, regulatory uncertainty, short selling, and fraud.
However, as markets and cryptocurrencies are treated as asset classes, infrastructure, and regulatory improvements will be seen, and Cheesman explains that more and more investors will recognize the robust and legitimate value reserves of cryptocurrencies.
He said: “For some people, the situation is even more serious – Venezuela and Turkey are the most obvious examples. Debt sustainability is a real risk for many legal tenders. Looking for it on a global scale. The assets of the value reserve, gold has achieved its purpose, but this is outdated. The value of digital storage is more practical and more continually in contact with the growing millennial generation.”
Regulatory uncertainty and weak infrastructure
Until 2018, the infrastructure for institutional investors and large retail traders was almost non-existent. The last barrier between institutional investors and the hosted money market has not been eliminated, and there are few tools for public trading that can promote the demand for cryptocurrency by certified investors.
The weakness of existing infrastructure and the regulatory uncertainty of cryptocurrencies have prevented large amounts of funds from flowing into the cryptocurrency sector from the wider financial markets.
Thus, the speculative bubble in the 2018 cryptocurrency market is conceptually similar to the bubbles before 2012 and 2016, with continued adjustments triggered by panic selling by speculators and individual investors in the market.
The 80% correction in the cryptocurrency market is similar to the previous decline, but the expected market recovery will be very different from the previous one.
In the past, Bitcoin failed to gain growth at the main level of support, and there have been no signs of recovery in more than two years. This year, Bitcoin has tried three times to break through the support level of $6,000. Although it has not been successful, Bitcoin has not significantly fallen below the support level of $6,000.
However, with the regulatory framework of the cryptocurrency market and the continuous improvement of trusted custodian solutions, more organizations will be willing to take a big risk and invest in an early stage market.
“Regulators around the world are working hard to address how to warn cryptocurrency regulation in a responsible manner. The decentralization movement has created many complex questions about asset classification and bad behavior. Therefore, things are progressing quite slowly, but overall regulation Institutions have adopted an attitude that demonstrates their respect for potential innovation. Regulatory uncertainty in turn reduces the speed of institutional investors and lacks regulatory, insurance, data and risk management solutions.”
Progress in regulation in Korea and Japan
South Korea and Japan have introduced legislation on cryptocurrency and blockchain to manage the encryption and blockchain industries as legitimate industries.
On September 8, CCN reported that the Uzbek government decided to legalize cryptocurrency transactions, initial coin issuance (ICOs) and digital asset mining.
As billionaire investor Mike Novogratz said earlier, considering the likely adoption of a robust hosting solution in the coming months, the next long-term rise in cryptocurrency is entirely possible by pensions and hedge funds. And other institutions lead.