- Cryptocurrencies have evolved as user behavior has shifted more towards digital technologies.
- The cryptocurrency space is hard to navigate due to the abundance of cryptocurrencies that continue to flood the market.
- Current cryptocurrency providers need to educate participants in the technology, though market cycles should bear remembrance.
- The ideology of “get rich quick” continues to prompt exuberant demand for cryptocurrencies.
Cryptocurrencies have evolved into a digital standard, which transcends existing economic standards. Bitcoin’s volatility makes it attractive for investors due to the high-yield investment returns. Digital natives are the main beneficiaries of digital technologies as 94% of crypto buyers fit the Gen Z/Millennial profile. As an abundance of new investors enter the market, demands diversify, and investors are seeking out high financial yields as they start to understand the market.
The High Horse of Crypto
During an interview with DailyCoin, Ben Caselin, head of research and strategy at AAX, highlighted that the current digital market is hard to navigate from a user perspective. He specifically emphasizes that participants in the industry vary, with the supply having to be diversified as a result. Additionally, he posits that crypto is “really difficult to navigate as a business,” adding:
"...Then there are the institutions that have actually come in, but they come in, they command much more capital, and they play a whole different game, and for newcomers, that's very difficult to navigate." The high volatility of Bitcoin in 2017 was due to the lack of liquidity, and new institutional interest curbs some of those concerns. Adding to that, Ben Caselin emphasizes that “compared to 2017, right now, the market infrastructure is way better,” further denoting that there is “much more knowledge in the space,” regardless of if it’s actively trading or simply understanding the market.
A Product of Digital Culture
Cryptocurrency projects are particularly appealing to the younger demographic. New means of promotion are intended to place the product in front of consumers who are digital natives. Caselin argues that the new crypto consumers “grew up in a digital age and know not to trust some random email promising you a million dollars, right?”
With each new emerging technology, security breaches and scams are part of the innovation process. Speaking In that regard, Caselin said:
"There have always been scammers, and people need to educate themselves and become wised up," arguing that younger generations “are much less likely to be scammed” as they were raised during the digital revolution.
Despite the plentiful reserves of digital knowledge, there is a lack of interest in educating users about the existing risks. The lines between decentralization and centralization of blockchain have become blurred. “The solutions are there, but the culture is not there yet,” asserted Caselin.
On The Flipside
- Digital native investors are highly influenced by social media personalities that generally have a hidden paid agenda.
- Memecoins will not stand the test of time and are just a distraction to the larger development of crypto.
- The SEC issued a statement in 2017 warning that influencers are not to be trusted for financial advice.
- TikTok banned financial advice videos, putting an end to the FinTok phenomenon.
The Drawbacks of an Unregulated Market
Crazes in the crypto market have not changed since the first emergence of Bitcoin, in fact, new trends have kept speculative interest high. Ben Caselin emphasizes that the memecoin hype is similar to that of the 2017 ICO boom and colored Bitcoins, which highlights that cryptocurrencies can “flip it around and show you something that you didn’t expect.”
Previous experience in the market makes people more aware of the entire industry, however as Caselin argues:
"I think there's that same kind of craziness that we saw in 2017 and that's also because many new people have joined the space, so while kind of a core group of maybe people that already experienced one or two cycles, you know, maybe they're strong and HODLing" In short, Caselin discusses that no matter how experienced cryptocurrency users are, new trends emerge, which then seconds new users to partake, making each crypto cycle distinct but similar at the same time.
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