The crypto winter has arrived. Around 58% of the value of Bitcoin was lost in the second quarter of 2022, and the market for all cryptocurrencies lost about $1.2 trillion.
Regulators are paying close attention, and there have been more rules about cryptocurrencies around the world, especially in the US, because institutional and private investors have lost a lot of money.
Cryptocurrency will survive the winter despite the sharp declines in values and exchange closures, and regulation should instill much-needed trust in both new and old players, which can only be beneficial.
When markets fall, long-term investors can buy, but this is a strategy that works best for established players in traditional financial markets.
Regulations on their way
Industry professionals frequently worry that innovation may stall once regulators and other technologies enter the crypto-sphere.
Regulation is unavoidable; according to the IMF, crypto assets are no longer legal, and regulators must keep up.
The European Central Bank has asked eurozone countries to harmonize their crypto regulatory laws before EU-wide legislation takes effect at the end of 2023.
With the help of the US Treasury, the US is also pushing for new laws to close regulatory gaps in the cryptocurrency industry.
Basics of Trading
When you get right down to it, the basics of trading cryptocurrencies are remarkably similar to those of regular financial markets.
Some people say that adding more rules will make things more stable, safe, and efficient, which will lead to more innovation, competition, and choices, not less.
Its function as a supplementary form of currency will be strengthened by better monitoring and governance, which will also silence the skeptics who claim it is like the wild west.
Giving existing firms and new market entrants security and choice is ultimately what matters.
In addition to stricter regulation, better analytics are also required, and once again, the technological expertise and knowledge acquired in conventional financial markets can be very effectively applied in this situation.
Cryptocurrency trading isn’t as fast-paced as many people would expect, which is surprising for a sector that has developed an image of being fast and furious.
The blockchain technology that runs the sophisticated front-office exchanges is a hodgepodge, and much of it is pretty clunky.
Market manipulation between pricing and settlement poses a significant risk of fraud, so businesses will need to use tried-and-true technologies and processes to spot and halt such transactions.
Experience and Mistakes
The knowledge gained in deploying analytics technologies for market surveillance and fraud purposes will not only be directly applicable in the crypto space but will also help firms gain a quick and in-depth understanding of how these decentralized markets function.
This presents an advantage for businesses entering crypto from traditional financial markets.
These marketplaces are by nature far more fragmented and flexible than other, more mature ones. Even though real estate transactions don’t happen as quickly as with other types of assets, the sector is changing and growing at a fast rate.
In order for R&D cycles and turnaround times for new product development to keep up with market demand, businesses need an analytics stack that can handle the enormous volumes of data being produced.
In order to achieve just that, surveillance platforms have been developed that can collect, process, and analyze enormous volumes of data in many different formats that have been produced by a wide range of systems and market participants.
by using them to analyze the cryptocurrency market more effectively, test and implement unique pricing, hedging, and trading methods, and manage the ensuing risk in real-time.
preparing for next
There are indications that the crypto winter is ending, and regulators and investors alike will welcome the increased maturity that comes with it.
A recent article from Bloomberg says that high-ranking crypto entrepreneurs who were known for their “bombastic” personalities and online fights with rivals and critics have quit.
More mature, seasoned professionals from the traditional finance sector are replacing them.
Without a doubt, we think the market will settle. Even though more rules will be needed, they shouldn’t be seen as the only way to keep things stable.
If businesses accept them, the tried-and-true technologies and processes that have helped traditional financial markets grow and change could and should be revolutionary for the cryptocurrency market.