As the crypto market suffers its steepest drop in months, we asked to hear what the people who live the industry day-in and day-out had to say about the crash's causes, its lessons, and its significance going forward.
Cody Solomon. Courtesy.
Director of Marketing, crypto derivatives exchange LXDX
"Cryptocurrency markets are nascent, thus, volatility is expected. A notable difference when comparing crypto to established markets is the lack of availability of derivatives. A vast majority of the trading of digital assets involve traders taking long positions, the result of which are big gains and big dips. We expect to see volatility dampened significantly as more derivative products become available to traders, leading to a healthier and more stable environment."
CEO of Invictus Capital investment house
"The dramatic sell down in cryptoassets over the past few days is not the first, and it will certainly not be the last, market event of its kind. It is important to note that these events have not occurred in isolation and are a result of a confluence of several factors, including broader global macroeconomic trends that have cascaded down to rattle risk appetite among investors. Short term sell-offs can be driven by numerous factors, with periodic, and the sometimes irrational, behavior of market participants driving prices. It is not difficult to find historical examples of this herd-like behavior across all types of markets."
"The Nasdaq 100 Index delivered -41.9 percent in 2008 due to the global financial crisis, only to return +53.5 percent and +19.2 percent in 2009 and 2010 respectively. Crypto assets have been through their own market gyrations. Early investors in Bitcoin need only look at the twin crashes in the asset’s price in 2013 for evidence of how quickly sentiment can change. It is clear from these events that negative, as well as positive, extrapolation and sentiment, are inherently temporal in nature. While we are cautious to make any predictions, these are great examples of how quickly markets can reverse losses, and gains for that matter."
"It is from this fact that great investors gain their edge. While less sophisticated investors (typically retail traders looking for short-term gains) are likely to sell in times of distress; institutional investors, with long time horizons and ample deployable capital, are willing to purchase these assets at a significant discount during these periods. This has proved to be a tried and tested method for generating long-term gains, such was the case for those with the stomach to have bought into the Nasdaq 100 going into 2009. Given this, it is important to remember that investing is a long-term pursuit in the face of short-term noise. Investors should avoid emotional decisions that have the potential to cause permanent capital loss."
Robert Flohr. Courtesy.
CEO of Trino, a blockchain-backed investment platform
"In regards to the recent decline, it’s difficult to determine what the triggers are because I don’t think anyone has any idea of who the actual investors are, including where they are and what their purpose for investing is; overall, there isn’t a clear picture of who the investor pools are. With this, it’s hard to understand the implications of various events and what the triggers are that are making certain people change their views."
"Still, in my opinion, crypto is here to stay. The first investors of Bitcoin entered this market because they are libertarians, driven by a philosophy of decentralization. They are also the ones still trying their hardest to stabilize the market because, for these holders, it’s a statement against central banks, governments, and institutional controls."
"What a project like Trino will hopefully address is the little interoperability in exchanges, meaning coins are sitting on different exchanges, sometimes centralized. The ultimate solution to advance market performance and adoption is a true decentralized exchange where there is no central control or authority, but rather interoperability between platforms and exchanges, so that people can exchange value openly and transparently."
"There are also other benefits to crypto, such as the ability to bring financial services to the unbanked populations around the world, and many of these cryptocurrencies are geared toward that purpose. Some form of crypto will define our future."
Sharon Shineberg. Courtesy.
Blockchain maximalist at Blonde 2.0 Public Relations
"Evolution in the biological world is a very slow process. In contrast, evolution in the crypto world is fast and aggressive. In the past two years, we have seen how successful marketing activity of one project is copied in a few days, whereas in traditional industries that kind of adoption could take years. Every project tries to get its share of the limited resources out there and slowly pushes the ethical limit of what is permitted and what is not In the process. Many companies sacrificed the vision, the goal and everything that was important and unique in their project."
"The good news is that the market has evolved and become much smarter and more realistic. Investors ask more correct questions, examine projects using logical models, and most importantly, understand the unspoken truth in the industry: 'There is not a single person who can see the full picture'."
"The market is preparing itself for a new era that is based on real value and healthy skepticism rather than speculation and market manipulation alone. This development will not be without growing pains. A lot of money will be lost, workers will lose their jobs, but this is all part of the natural way for revolutions to change the world."
Cobus Kruger. Courtesy.
CEO of Stackr, blockchain saving solutions
"While it is widely accepted that the current volatility in the crypto market was triggered by the Bitcoin cash fork, blame cannot be fully attributed to this one event. If you understand crypto/digital assets, then you’ll know that the fundamentals haven’t really changed. The problem is the volatility has been exacerbated by investors’ actions."
"What we are seeing is behavioral finance 101, with people acting irrationally. Investors have panicked and sold on fear and others have followed suit. It is not a phenomenon exclusive to crypto; it has been seen across the financial industry many times before and will continue unless there are mechanisms in place that protect investors from themselves. Hence the need for investment solutions that address investors’ biggest concern – the risk of losing money. Those that focus on reducing losses should ultimately decrease irrational behavior thus keeping clients invested."
"What crypto, and indeed any investor, needs, is more education on how irrational behavior can have a negative impact on their investment outcomes."
"The positive news around this fall is that if you understand the fundamentals of the crypto market, then what we are seeing right now is an incredible buying opportunity."