Industry analysis and predictions have inundated the internet as cryptocurrencies faced stronger headwinds in recent days – major digital coins are falling, exchange platforms are downsizing, and macroeconomic factors continue to put pressure on the industry.
While the conversation is rife with stories of billions of dollars in investment losses – others are asking a more forward-looking question: what can we learn from this meltdown?
One blockchain expert in Dubai said these recent industry developments “highlight the ever-increasing importance of having clear and effective regulation for digital assets.”
Luckily for the UAE, Mohammed Altajir, a custodian of UAE-made digital currency “Tratok,” said the country was “fast to pick up” on regulation.
“Regulation will become more vital as mainstream adoption increases daily, a fact that the UAE was fast to pick up on and lead the world in setting up a regulated ecosystem to encourage development of value-adding blockchain innovations,” he explained, adding the latest news could encourage other regulators to follow the UAE’s example.
The price fluctuations, however, are nothing new, Altajir said, as the industry has already gone through many volatility cycles in the past.
Bitcoin was first launched in 2009, but it only picked up in 2017, with its value reaching up to around $19,000 by year-end. Its meteoric rise was reversed in 2018, when it hit its post-peak bottom in December of that year at $3,000 – losing more than 75 percent of its value.
Altajir said the “fundamental use cases for the adoption of blockchain technology remain strong and supported,” hoping the recent industry movements could shed light on the underlying technology behind digital currencies.
“Expect a lot more emphasis to be placed on real world application going forward and less to be place on hype and speculative vapourware,” the Dubai-based blockchain advocate said.
He added: “The industry still remains in infancy and I believe that these recent developments are just another lesson that the world will learn from as it continues to embrace the blockchain revolution.”
Bitcoin was still trading lower on Friday at around $21,000, and Vijay Valecha, chief investment officer at Dubai-based consultant Century Financial said the “euphoria an buzz surrounding digital assets have vanished as the bull cycle is about to wipe off completely.”
“The current selloff is a classic example of volatility begetting more volatility. The selling pressure has yet to reach its peak climax as massive liquidations still occur in the DeFi space,” he told Arabian Business.
Another financial markets expert said the market is due to consolidate, with the “vast majority of existing coins” disappearing, “along with the hype schemes based on unrealistic growth expectations.
Roberto d’Ambrosio of global brokerage firm Axiory said this market movement “closely resembles” the “dot com bubble,” where many Internet companies crashed and practically disappeared.
“We all know how it ended: those companies that had substance survived, after falling up to 80 percent off their highs, and made a remarkable come back over the subsequent years,” he explained, adding “All the rest disappeared, not even their name survived.”
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