Crypto investors have just endured one of the toughest quarters on record. Despite a recent rebound, fears of over regulation, a clampdown on mining in China and environmental concerns have all contributed to negative sentiment in the sector.
Most CoinDesk 20 assets, which constitute about 99% of the crypto market by verifiable volume, finished 2021 Q2 with negative returns. The CoinDesk Bitcoin Price Index (XBX) fell 40.4%, its third worst quarter in terms of performance since inception. Conversely, the CoinDesk Ether Price Index (ETX) ended the quarter up 18.7%. While bitcoin has recovered some of its losses, trading around $40,500 at press time, the level of optimism is far from what it was at the start of the second quarter.
There may be reasons, however, to expect more positive news ahead. CoinDesk spoke to several industry figures and asked them what they thought about the outlook for crypto markets given some of these recent headwinds.
Here is what they said:
Ryan Moore, CEO of bitcoin banking app Mode
What we’re starting to see is the inevitable, and necessary, meeting of global regulators with industry players. This will only continue as investor interest builds, which is happening fast. The incumbents need to show that they're being responsible and prioritising consumer protections, and so do we.
Yes, there have been price fluctuations but without doubt, I'm still bullish on Bitcoin. Bitcoin has proved its position as a store of value and this will only be entrenched by Millennial and Gen Z investors. It’s scarcity, durability and security means that, by both fiat and cryptocurrency standards, it has long term utility and value. A few years ago Bitcoin was compared to the internet in the early ‘90s. This comparison still stands; the internet became ubiquitous and Bitcoin will too.
Engaging with regulation doesn’t preclude innovation or disruption. In fact this will enable the industry to grow. An increase in security and transparency goes hand-in-hand with an increase in investor confidence – both institutional and retail. We’re seeing investors seek out this assurance more and more. Ultimately, the added scrutiny we’ve seen in recent months is good for crypto.
Richard Byworth, CEO of crypto financial services company EQONEX
We remain bullish for the remainder of the year. The mining crackdown in China has impacted the price heavily as miners migrate and hash power has dropped, but longer term this is bullish and will make Bitcoin more resilient. We are still forecasting BTC to be around $175,000 at the peak of the current cycle, into 2022.
The regulatory scrutiny of the industry at present will also lead to longer-term frameworks being put in place and regulatory focused players like ourselves providing on ramps for institutions. Our roadmap for the rest of the year is focused on derivative product roll out, a core requirement for the majority of institutions that will lead to reduced volatility and even further adoption.
Steve Ehrlich, CEO of digital-asset broker Voyager Digital
After a period of trading in range, I believe that bitcoin and crypto will increase substantially by year end. My price prediction is that bitcoin will approach $100,000 by Dec. 31, 2021. The continued adoption of cryptocurrency will continue to accelerate through the year.
Peter Wall, CEO of bitcoin mining firm Argo Blockchain
I don't get worried about short-term fluctuations in the bitcoin price. As a company, we’re thinking longer term – in quarters and years, not days and weeks. If you look back and consider the trends we’ve seen over the last six to 12 months, and especially over the last five to 10 years, the digital asset ecosystem is clearly moving in one direction. We believe it's still early days, and the digital asset ecosystem will continue to disrupt traditional players and is the future of money and finance. The narrative over the last six to 12 months has been of large-scale institutions adopting positions in cryptocurrencies, and while we have seen companies such as MicroStrategy, PayPal and Tesla do so, there will be many more to come.
I think it is easy to forget that large institutions are like aircraft carriers and to change their direction takes a huge amount of effort, and most importantly, a significant amount of time. We believe that these adjustments are underway, and the industry will feel the full effect of these changes in the coming months and years.
Frank Schuil, CEO of crypto exchange Safello
China’s clampdown on mining has been priced in and the road ahead is bright. It opens up the market for other geographies to flourish. Miners will move to regulatory environments that are more favorable to crypto with less competition from a historically dominant China. On the regulatory side itself things look better than ever, at least in Europe. The ability for crypto companies to passport their registrations once MiCA is introduced will accelerate competitiveness and adoption. [Editor’s note: MiCA is the European Commission’s proposed regulation on markets in crypto assets.]