Cryptocurrency goes through periods of contraction and expansion, with each boom cycle testing the limits of how much internal and external demand exists for a particular coin. The cryptocurrency market has been characterized by high volatility, with rapid changes in price and short periods of strong growth followed by periods of decline.
In late December 2018, the cryptocurrency market was in a massive bull run. But after having reached record prices in November, it was expected that prices would begin to dip down. Instead, Bitcoin hit $20,000 by early February 2019.
Founder and CEO of Coinbase, Brian Armstrong, discusses Future of cryptocurrency.
As part of his interview with CNBC in early September, Coinbase Global’s (COIN -7.98%) CEO, Brian Armstrong, discussed his company’s approach to crypto winter, his thoughts about specific cryptocurrencies, and where he thinks the market will head in the months ahead.
Armstrong founded Coinbase in 2012 and has been its CEO ever since. Over the past several years, the cryptocurrency market has gone through numerous booms and busts. The value of Bitcoin (BTC 1.12%) was less than $15 when Armstrong started his business. As of today, it remains around $20,000, and Armstrong has an estimated net worth of around $2 billion.
The current Cryptocurrency situation is challenging, but there is always a reason for optimism
Despite Armstrong’s position as CEO of a popular cryptocurrency exchange, he does not know what the future holds for the crypto market. However, he has been around since just about the beginning of cryptocurrencies and has kept his company afloat regardless of the economy. In this regard, it is inevitable that people will listen when he shares his thoughts on the current market.
As part of the CNBC interview, Armstrong was asked about the current crypto environment and what it could look like once it returns to a more healthy state. Most noteworthy were his comments that larger institutions are now investing in crypto instead of primarily retail investors.
A particular sector will drive the next wave of crypto adoption, according to Armstrong: big tech. In his remarks, he cited Coinbase’s agreement with the world’s largest asset manager, BlackRock (BLK -3.67%). As part of the agreement, BlackRock’s investing software will integrate directly with Coinbase, enabling BlackRock clients to purchase Bitcoin seamlessly.
In the future, Armstrong believes more companies will adopt this business model. He is optimistic that this influx of capital entering the crypto market will send it to heights we’ve never seen since these large companies typically have more money on hand than retail investors.
In the meantime, investors shy away from risky assets like cryptocurrencies due to poor macroeconomic conditions, giving Armstrong’s company an uphill battle. Profits are primarily derived from transaction fees charged by Coinbase. As a result of decreased trade volume, Coinbase’s profits have taken a severe hit.
During an interview, he was asked when he predicted the current crypto winter would end. According to him, this crypto winter is different from others in the past because it occurs during times of rising inflation and rising rates.
It is Armstrong’s hope that the macro environment will improve in 12 to 18 months, allowing crypto to have a “nice recovery.”
Cryptocurrency Cycle: The main takeaway
While investors shouldn’t listen to every word billionaires say, they should take these statements into account when making decisions because they may contain valuable information. Since Armstrong has more experience in the crypto sector than nearly anyone else, he can provide more perspective on how things are currently shaping up for the sector.
Similar to the stock market, Armstrong believes crypto goes through cycles. Growth in the sector from 2020 to 2021 was not sustainable, and some sort of correction was inevitable.
Let’s say Armstrong is right, and the market will perform poorly over the next year and a half. Therefore, investors may wish to take advantage of incredibly discounted prices in preparation for a market recovery.
Via this site
