Is crypto winter over?
As the curtain fell on April, the New York-based investment behemoth, HC Wainwright, unveiled optimistic forecasts concerning the imminent evolution of the crypto sector. Those stalwart platforms that weathered the harshest days are primed to reap rewards in the upcoming bull market. Such deductions were drawn from a thorough examination of the market potentialities of the crypto trading titan.
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The dawn of the crypto spring is primarily signaled by the trajectories of crypto asset prices, which have experienced a remarkable 45% escalation since the outset of the year. This uptick is predominantly driven by the soaring price of Bitcoin, sporadically peaking at 67%. It's plausible that we are on the cusp of the ensuing bull phase.
The potentialities of the impending bull market can be forecasted, taking cues from historical precedents. We anticipate a substantial leap in the market capitalization of the crypto landscape and a majority of its projects, burgeoning adoption of crypto by individual and institutional investors, and a swell in the volume of crypto trading, among other trends.
To illustrate, in the 2021 bull market, Coinbase saw its transaction revenues skyrocket by a staggering 524% compared to the previous year, constituting three-quarters of the firm's total net earnings. A similar phenomenon was discernible across various other crypto platforms.
Global crypto market capitalization, 2018 – 2023 (in billions of USD) Source: HC Wainwright
Presently, exchanges are making concerted efforts to diversify their income sources, with a focus on enhancing subscription services. Analysts hypothesize that this multi-pronged strategy in revenue generation could potentially catapult the sector's capitalization by an impressive 45% in the next quarter alone.
HC Wainwright posits that we're merely at the genesis of a broadscale crypto adoption. There lies a vast untapped potential for the expansion of cryptocurrency usage among both private and institutional investors. Report authors underscore the striking resemblance between the crypto adoption curve and the internet penetration trajectory during the formative decade of the World Wide Web's evolution. Interestingly, while the Internet emerged in the 1990s, the birth of the crypto market occurred in 2014.
Internet vs. Cryptocurrency Adoption The green trajectory indicates the count of internet users The blue trajectory signifies the number of crypto enthusiasts. Source: HC Wainwright
Nonetheless, stringent regulatory scrutiny could pose a substantial hurdle, potentially hampering the expansion of the cryptocurrency business landscape. Beyond firms such as FTX and Voyager, which faltered amid last year's bearish market, there are certain enterprises like Bittrex, already curtailing their operations in the United States, or Binance, which is losing market share due to the pressure exerted by the federal government.
The activities of Coinbase are also under the federal microscope. As a reminder, analysts point out that the company's market capitalization plunged by over a third following the receipt of a notice from the U.S. Securities and Exchange Commission (SEC). Cryptocurrency enthusiasts should consider these evolving trends when making investment decisions in the realm of cryptocurrency, as cautioned by HC Wainwright.
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