As a seasoned crypto investor with over a decade of experience navigating the digital asset landscape, I find Gemini’s latest institutional research report both insightful and reassuring. The report’s optimistic outlook is rooted in solid fundamentals such as easing monetary policies, improving regulatory conditions, and the potential for consumer applications.
As a crypto investor, I find the latest Gemini institutional investor’s research report intriguing. Despite the recent dips in major cryptocurrency prices, it seems that various factors may fuel crypto growth within the coming year or two.
According to the report sent to Crypto News, Gemini’s research team paints an optimistic picture of the cryptocurrency market. This optimism stems from the relaxation of monetary policies, better regulatory environments, and possibilities for consumer-friendly applications.
It’s proposed that certain cryptocurrency enthusiasts believe there’s a shortage of fresh investors in the market, even with the introduction of spot Bitcoin (BTC) and Ethereum (ETH) Exchange Traded Funds (ETFs), as well as sell-offs from long-term holders.
A less optimistic perspective suggests that the recent surge in cryptocurrencies might have been caused by the unprecedented global pandemic, and the current demand may not be proportionate to the increased blockchain capacity provided by new scalability solutions.
According to a recent analysis by Gemini, it’s projected that the cryptocurrency sector and its overall value will likely expand further, driven by both general trends (external factors) and unique elements specific to each crypto asset (idiosyncratic factors).
The report states that while nothing can be fully predicted, there are indications suggesting that the crypto industry, along with its market value, is likely to see further development due to factors outside of crypto as well as unique aspects inherent to this sector.
Global monetary policy
A key finding from the report centers around a notable change in worldwide monetary strategies. In contrast to the strict policies that were previously enforced, we’re now seeing a loosening, such as the European Central Bank and the Bank of Canada reducing their rates, and an inclination towards lower interest rates becoming more prevalent in financial markets.
In simpler terms, if this situation continues, it might cause the value of the U.S. dollar to decrease. This could, in turn, boost the prices of cryptocurrencies since their values would increase compared to a weakened U.S. dollar.
In the United States, a similar set of circumstances was observed at the start of 2019 when the Federal Reserve paused its rate hikes and started leaning towards a more accommodative stance, as stated in the report.
The actions by central banks to reduce their holdings and combat inflation have resulted in an increase in long-term real interest rates. Now that these rates are approaching lower levels, it provides another advantageous circumstance for the cryptocurrency market, similar to the situation that fueled crypto assets’ growth during early 2019.
Political and regulatory developments
In the United States, there’s been a significant move toward agreement between both political parties on laws that are friendly to cryptocurrencies. Upcoming elections could strengthen this tendency, as many anticipate a Republican win, which might lead to the implementation of more advantageous rules regarding cryptocurrencies.
Independent of the election results, Democrats are increasingly open to cryptocurrencies, as demonstrated by presumptive nominee Kamala Harris seeking counsel on crypto matters from top technology advisors.
As a researcher exploring this domain, I’ve noticed an intriguing convergence of events: a political transformation, intense lobbying from the industry, and an increasing number of American adopters embracing cryptocurrencies. This pattern seems to hint at a regulatory environment becoming increasingly favorable, potentially opening up more institutional and retail investment avenues.
In a chat with crypto.news, Patrick Liou, Gemini’s Principal of Institutional Sales, highlighted that both the actual and presumed results of the election may shape the future of the cryptocurrency market. He also shared that a survey conducted by Gemini for its forthcoming State of Crypto initiative revealed that a large majority (73%) of U.S.-based crypto holders will take into account a presidential candidate’s views on cryptocurrency when casting their votes for the next American president.
Liou underscores that approximately 47% of people who haven’t invested in cryptocurrency so far show apprehension about the industry’s future, suggesting a significant demand for more stringent government oversight to tackle lingering doubts and ambiguities.
“If the upcoming government takes a favorable approach towards cryptocurrency and establishes sensible regulations for the sector, it might encourage many people who are currently hesitant due to regulatory ambiguity to join in.” (Liou)
A notable manifestation of this evolving political trend emerged when U.S. Senator Cynthia Lummis suggested a scheme for a tactical Bitcoin reserve, aimed at strengthening the US dollar and solidifying America’s dominance in international financial affairs.
Globally, there’s growing optimism that China may lift its cryptocurrency restrictions and Hong Kong is becoming more favorable towards regulation in this space. These developments could potentially boost the overall cryptocurrency market.
These modifications might prove significant, particularly if Bitcoin becomes globally acknowledged as a valuable strategic resource.
Infrastructure growth and new applications
Although there’s a worry that the rapid growth in cryptocurrency infrastructure might overshadow user applications, the report suggests that such a situation could lay the groundwork for globally recognized consumer apps to thrive.
The increasing use of prediction markets, like Polymarket, and the swift expansion of stablecoins suggest a strong possibility for versatile, resilient applications that thrive as the blockchain’s storage capacity expands.
At present, we think that Polymarket’s user base leans more towards retail and cryptocurrency users, which might influence their preferences on topics such as upcoming elections. One benefit of Polymarket compared to conventional opinion polls is that traders on Polymarket are putting real money on the line when they share their opinions and confidence, whereas traditional surveys may gather responses from people with less at stake.
Stablecoins, notably, are rapidly expanding their reach, boasting substantial value and growing adoption within secondary networks like Ethereum. These digital currencies could prove vital for worldwide payment systems, capitalizing on the unused space within blockchain technology.
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2024-08-03 01:52