Analysts: Crypto Market Crash is 'A Bump in the Road' Before Real Growth Begins

Omar Faridi
  • Analysts and executives at Bloomberg's Crypto Summit have said that crypto market will gradually recover.
  • What we are seeing now, with the market crash, is just a part of growing pains, or in other words, a "bump in the road."

James Bevan, the chief investment officer (CIO) at CCLA Investment Management, one of the UK’s largest charity fund managers, recently stated that he does not think the cryptocurrency market crash is “an existential crisis.”

Just A "Bump In The Road"

Bevan, who has previously served as CIO at Barclays Asset Management Group, explained that the drop in digital currency prices is more like “a bump in the road and institutional investors have had plenty of bumps in the road in conventional currencies and transaction systems.” Bevan’s comments regarding cryptoassets came during a panel discussion at the Bloomberg Crypto Summit - which took place in London this week.

Other panelists such as Lewis Fellas, the co-founder and CIO at Bletchley Park Asset Management, a UK-based cryptocurrency fund, said the new stablecoins market has a lot of potential. According to some estimates, there are currently about 120 different stablecoin-related projects that are under development.

Although the panelists all seemed to think digital currency prices would not recover anytime soon, they did forecast that the markets would gradually recover as they were only going through growing pains. Moreover, the panel members said the crypto market will likely see more regulations in the future, more involvement from institutional investors, greater level of integration with traditional asset classes, and lower volatility levels.

Stablecoins, Security Tokens May Become Top Performers

Two key areas of growth identified by the panelists were stablecoins and security tokens, which are another new digital asset that are essentially contracts representing ownership in traditional assets such as stocks or real estate.

Commenting on the current state of the digital asset ndustry, Fellas remarked:

I think we’re just getting started. I can see a huge expansion.

Ryan Radloff, another panel member and the CEO of CoinShares, a crypto treasury management firm, noted that if different jurisdictions allow for less stringent digital currency regulations compared to others, then that could pose certain challenges. For instance, it could make it more challenging for crypto-related businesses in tightly regulated places (e.g. US, UK) to compete with smaller jurisdictions such as Malta which have fairly lenient regulatory guidelines.

Acknowleddging The Work Being Done

During the panel discussions, Marieke Flament, the global chief marketing officer at Circle Internet Financial, acknowledged that “It’s good to see some larger countries step through and show the route” when it comes to formulating regulatory guidelines for digital currencies. However, he added that we should “not discredit the work that others [in other jurisdictions] are doing, because if you have no one starting then everyone is waiting.”

Although Flament did not specify which jurisdictions are “waiting” as others take the first step, India is among several other nations that has not moved forward as expected with developing a regulatory framework for cryptocurrencies. As CryptoGlobe reported in early September, India's financial regulator, the Securities and Exchange Board (SEBI), had sent a group of its representatives to meet with regulators in the UK, Switzerland, and Japan.

The group was sent to learn how digital assets are regulated in all three nations. At the time (in September), India’s reserve bank (RBI) had released a report acknowledging the benefits of learning how regulators in other countries respond to new financial technology

India’s Finance Minister Says Countries Are 'Rushing' Into Cryptocurrency

  • India's Finance Minister and Reserve Bank Governor cautioned against countries rushing into digital currencies. 
  • IMF Director Kristalina Georgieva said the organization is taking a "balance approach" to regulation.

Reserve Bank of India Governor Shaktikanta Das and Minister of Finance Nirmala Sitharaman cautioned that countries are rushing into cryptoassets, in the wake of Facebook’s handling of libra. 

Das spoke on cryptoassets earlier in the week at the annual meeting for the International Monetary Fund and World Bank. Sitharaman told Indian reporters of the meeting, 

On our side, the Reserve Bank Governor spoke about it during our turn to intervene. I got the sense that many countries were cautioning on rushing into this.

Das continued, explaining how some officials took issue with libra being labeled a ‘stablecoin,’

Some of them [countries] of course even suggested that they shouldn't be using, all of us shouldn't be using the name stable currency because that's the expression they used. Many cautioned to the extent saying even the name should not be stable currency, it should relate to virtual currency or something of the kind.

Sitharaman said the general consensus was that countries need to show “extreme” caution in the handling of digital currencies. However, she also admitted there were discussions about the benefits of digital currencies, saying that "presentations were also highlighting the strenghts of such virtual currency."

IMF Managing Director Kristalina Georgieva said the organization is taking a “very balanced approach” to crypto-assets while being “mindful” of the risks they pose for consumers. 

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