The cryptocurrency industry has been exploding in terms of its usage and popularity, with an increasing number of investors wanting to become a part of it every day. New tokens and success stories all play a significant factor in this increase in the number of retail and institutional investors, and as such various regulators are now forced to not only acknowledge cryptocurrencies as being a new asset class but to also treat the crypto industry with a bit more seriousness than before.
With this in mind, the regulators in question have often stated that stifling the cryptocurrency industry’s growth is not the goal, as efforts need to be made to ensure that trading and business-related activities are being conducted in a manner that is both legally as well as morally correct. These comments were partly made by Meltem Demirors of CoinShares.
The cryptocurrency industry reaches a market cap of $2.6 trillion
Regulators were forced to take action when the crypto industry reached a whopping amount of $2.6 trillion for its overall market capitalization. Demirors, therefore, said that although this amount is astounding, we must never forget the sheer level of volatility and unpredictability associated with cryptocurrency, as while many have been able to successfully utilize cryptocurrency to become extremely successful, there are also those countless people who were financially ruined by it.
Regardless, the SEC’s Gary Gensler had stated that regulations for various cryptocurrency exchanges will need to be carried out much more rigorously from now on as the industry grows in popularity and regulators all over the world are forced to take notice. In fact, the crypto industry had begun 2021 with an overall market cap of less than $1 trillion, which means that this amount has managed to more than double itself in a period of fewer than six months.
Impact on sentiment
Regarding the warning issued by various central bankers, Demirors emphasized the impact that this kind of attitude could have on sentiment. This is significant because sentiment is what usually informs demand, which in turn normally informs all of the different events that occur within the market.
Furthermore, as far as the cryptocurrency-related price actions go, Demirors believes that flat prices will never stay as such for very long. This makes sense, too, as more than $3 trillion worth of dry powder is currently resting on the side-lines within the United States alone. One cannot hence help but wonder when portions of this amount will ultimately enter the market.