What a time to be a Bitcoin believer. For those dedicated HODLers that chose to brave out the crypto winter, it finally appears that there is a light at the end of the tunnel. The rewards will have been well earned too. After all, it takes a certain determination to not sell your assets in the face of; an eighty percent price crash; a civil war; countless instances of theft and John Mcafee and Craig Wright doing their best J.J Jameson impression over the identity of Satoshi Nakamoto.
The price of Bitcoin has almost doubled across the last couple of months, growing from approximately $4,000 at the start of April to around $8,000 at the start of June, and with reports suggesting that Facebook soon plan to launch their own cryptocurrency, it even appears that the much mooted institutional involvement is now on the horizon. Despite the recent slide which dropped Bitcoin’s price to around $7,500, it appears that the future is looking much rosier than it was this time a year ago. But, before you rush to dust off your ‘Make Crypto Great Again’ cap, let’s look at what this price movement will mean.
With such a substantial price appreciation, it’s almost inevitable that we’ll now witness an uptake in interest from retail investors, as FOMO begins to take full hold. The relative buoyancy of crypto assets will encourage many to enter the sector in search of a quick buck. Of course, the knock-on effect of this will be the regulators keeping a closer eye on the market. While many in the crypto community may decry this, greater regulatory involvement is an absolute necessity. Unfortunately, the combination of uneducated investors and a decentralised market structure is rife for fraudsters to take advantage of, so regulators must do all that they can to protect investors from fraudulent activity.
On this note, the regulatory authorities have made significant progress in their understanding of digital assets since the conclusion of the last bull run at the tail end of 2017. As such, the FCA is an a much better position to ensure that the appropriate oversights and measures are in place. However, should the rally continue, then further action is required. The FCA is currently preparing to release its Policy Statement on crypto assets, which comes as a result of a six-month-long consultation. This guidance will provide regulatory clarity for those operating in the crypto space – determining whether ongoing activities fall under pre-existing legislation. Should the market continue to trend upwards, then the FCA will bound to accelerate these efforts, perhaps going beyond the issuing of a simple policy statement.
Finally, it’s also incredibly likely that we’ll see the re-emergence of products and services whose viability declined as the market contracted. We will witness new companies looking to enter the marketplace, raising capital through Security Token Offerings (STOs). These will appear small when compared to the Initial Coin Offerings (ICOs) launched during the market’s peak in 2017 and 2018, but as the market continues to grow, so will their size.
We’ve left the darkness, and a renewed market may encourage many to get involved. But if you’ve spent the last two years on the sideline, then you may find that lots has changed. Make sure to study the market, and conduct your due diligence, as this will help to keep you and your investments safe!