Cryptocurrencies recently experienced a sell-off of epic proportions, with Bitcoin momentarily hitting an incredibly low point of $3,637, down 82% (yes, eighty-two) from its all-time high of $19,891.
Whether it’s due to the coronavirus, oil shocks, re-ignited US-Iranian tensions, PlusToken, or just general panic is uncertain.
After all, if there was certainty, I’d be busy taking out loans to invest more and acquire riches.
Between John McAffee predicting Bitcoin would hit 1 million dollars in 2020 and others predicting Bitcoin would hit 0 dollars, crypto prices are obviously a hotly-contested topic.
One thing, however, is certain: Crypto will bounce back.
Fundamentally, the reason is simple. Markets are cyclical. A recession was inevitable, whether in traditional markets or alternative ones, like cryptocurrency. The question was never if, but always when.
From the Great Depression to the dot-com bubble to the Great Recession, traditional markets have overcome busts time and time again, as they always will.
The difference here is that this is the first pandemic occurring during the history of cryptocurrency. It turns out that crypto doesn’t act well as a safe-haven, and crypto investors largely reacted in the same way as traditional investors. They panicked.
That being said, crypto is already starting to bounce back. As of writing this article, Bitcoin is above $5,000 again, which is still a dramatic drop from a couple of weeks ago, but it’s a sign of the resilience of the market.
While many investors panic-sold, others saw the low price as a discount entry point.
More importantly than any discussion about price, crypto is resilient because blockchain is resilient.
Beyond the technical resilience (as in it’s impossible to hack the Bitcoin blockchain, for instance), the industry itself marches on, regardless of price movements.
Blockchain product innovation will always be at the core of the industry, regardless of the media’s focus on price.
Price is inherently an easy source of news for the media, presenting an unending opportunity for quick headlines.
What’s more difficult, but also a more accurate reflection of reality is reporting on blockchain in the real world.
That discussion spans from startups to corporations to governments, and of course to individuals. Corporations around the world, from Amazon to Walmart, are innovating on the blockchain, as reported in a Forbes list of 50 billion-dollar companies using blockchain.
These companies won’t suddenly shutter their innovation departments simply because Bitcoin investors panicked.
Neither will governments. Governments such as Dubai and Estonia have already implemented blockchain at scale, making this technology a core part of their digital strategies.
Of course, startups as well, especially in the private markets, are more focused on value-creation and product innovation over price movements.
Perhaps most important are the individuals using blockchain in their day-to-day lives.
While it’s common to hear a naysayer claim that there are few real-world uses of blockchain, it’s easy to lay this claim to rest with the example of Invictus Capital, an alternative investments group managing a number of tokenized funds.
Tokenization means creating a digital representation of an asset using blockchain-based smart contracts.
The concept is nothing new, but innovative use-cases are constantly emerging, such as the tokenization of investment funds, which increases the accessibility of investments. This is particularly useful for alternative investments, which traditionally suffer from a lack of accessibility, high investment minimums, and low liquidity.
By their very nature, tokens are more easily accessible, as they can be sent globally, peer-to-peer, at virtually no cost. A tokenized fund means that an investor can receive returns from the fund by purchasing a single token.
Invictus Capital created and manages a number of innovative tokenized funds (including the world’s first tokenized crypto index fund) such as an Emerging Markets Solar fund, enabling anyone, anywhere to contribute to global clean energy production by financing solar energy infrastructure projects.
Over 15,000 investors trust Invictus Capital, which has product developments like a tokenized real estate fund in the pipeline.
Hopefully, innovations like these will one day dominate blockchain headlines, rather than all the price discussion we see today.
Fortunately, we seem to be on the road to a more fruitful narrative around blockchain. The recent crash has attacked the safe-haven narrative of crypto, and indeed the discussion may ultimately shift away from price.
Image by Gerd Altmann from Pixabay
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