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- The financial institutions have recently issued more mixed and conservative price estimates.
- The presently retreating market cap of many cryptocurrencies is still a positive development.
- While fully acknowledging the benefits of higher asset prices, more attention can be paid to blockchain and crypto applications.
Since rocketing off in the second half of 2020, the crypto space consistently hit all-time highs in terms of both trade and market cap. This excitement hype in the crypto space hadn’t been seen since the 2017 bull run, yet now the prices are way off their highs. The increased interest also brought indications of an overheated market, evident by the Beeple auction and Dogecoin pop.
Concluded Market Overheating
Interestingly, the financial institutions have recently issued more mixed and conservative price estimates. Even though such institutions are the opposite of bitcoin’s decentralized promise and had previously published bullish price targets, the forecast can’t be ignored, especially given the dramatic rally in crypto prices. It’s known that the market determines assets’ worth, yet the fact that crypto that began as a joke reached $50 billion signifies overheating in the space.
Dogecoin touched $50 billion in market cap; Tether, the issuer of the USDT, hit a market cap of $50 billion and solidified its position as the largest stablecoin. Stablecoins have more practical applications than Dogecoin for individual and institutional adoption. And similarly, even the presently retreating market cap of many cryptocurrencies is still positive.
Positive Reduction in Hype
As explained by Sean Stein Smith in his writing for Forbes, the falling market has increased the level of excitement and interest in the blockchain and crypto sector, yet it did bring a significant reduction in the hype. Meaning, while fully acknowledging the benefits of higher asset prices, more attention can be paid to practical and tangible blockchain and crypto applications.
Better Crypto Productization and Adoption
The crypto productization drive also ascended from wishful thinking to market reality, except for maybe in the United States. But the newly confirmed head of the SEC, Gary Gensler, who is quite familiar with this sector, might as well change that soon. 2021 alone witnessed several major U.S. banks launching bitcoin and crypto products for clients. Still, some people are wary of crypto, most of which originates from its perceived, often incorrectly, volatility.
Developments in 2021 and Overall Growth
The price discovery process, the fluctuating prices, is an integral part of any freely traded marketplace. It is too early to say whether or not 2021 will bring price stabilization or return it to its bullish trends. However, reducing the potential overheating will surely benefit the policymakers seeking to productize blockchain and crypto, rendering it more approachable and understandable for all.
Steve Anderson is an Australian crypto enthusiast. He is a specialist in management and trading for over 5 years. Steve has worked as a crypto trader, he loves learning about decentralisation, understanding the true potential of the blockchain.
