The virtual currency market continues to evolve rapidly
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As the frenzy surrounding the approval and launch of 11 spot Bitcoin ETFs subsides, analysts and investors alike have been on the fence since 2024 began, amid a protracted series of legal actions embroiling the SEC. There are many things to do. In addition to market-moving headlines, the looming US presidential election is also impacting market sentiment and appetite for crypto assets. With former president (and current candidate) Donald Trump voicing his opposition to central bank digital currencies (CBDCs) and other politicians condemning the development of such instruments, cryptocurrencies are becoming increasingly popular. The topic is likely to play an important role in future election campaigns. Meanwhile, while Congressional leaders continue to emphasize the role that cryptocurrencies can play in financing terrorist and criminal activities, these totals still dwarf the funds provided by the US dollar.
While these headlines are important to the long-term sustainability of both Bitcoin and the crypto market as a whole, there are several other headlines and trends that investors should pay attention to. One important trend to note is that even though policy uncertainty remains the dominant policy in the US, institutional investors will acquire billions of Bitcoin by his 2024 That's what I'm doing. To that end, politicians and soundbites may rise and fall over time, but they are more important than simply fueling debate on social media to driving policy and business conversations in tangible ways. It addresses some of the big issues.
Let's take a look at some of them.
FTX plans to make investors whole
In what many have noted as an unexpected twist in the continuing saga surrounding FTX's collapse and bankruptcy, recent plans have been announced showing how FTX plans to make its investors whole. This is very good news and should be celebrated for many reasons. First, investors who suffered losses through no fault of their own due to Bankman Freed's criminal conduct will be fully recovered. Second, it also demonstrates that bankruptcy proceedings and related laws are capable of handling complex, large-scale, and multinational cryptocurrency filings such as FTX. Finally, this should serve as an additional example for crypto investors and proponents that despite the differences between crypto and fiat assets, investors should treat crypto assets as raw financial instruments.
It is important to note that these repayments will be made at the market value of the virtual currency at the time of the FTX bankruptcy filing. By the way, the price of Bitcoin at the time was around $20,000 per token, well below current market levels. Despite this disappointment for some investors, the fact that FTX will repay investors is news worth celebrating.
Virtual currency mining is subject to investigation
It comes as no surprise to experienced crypto investors and market participants that the energy consumption of cryptocurrencies and their associated environmental impacts are once again under scrutiny. This time, the scrutiny went beyond soundbites and took the form of a government investigation. Specifically, the U.S. Energy Information Administration will begin closely tracking the electricity consumed by cryptocurrency mining companies operating in the United States. To that end, the EIA will begin its investigation in February 2024, focusing on a select number of Bitcoin miners who will be required to provide details of their energy usage, among other operational statistics. is required.
This request and approval was granted as part of an emergency data collection approved by the Office of Management and Budget. This formal request and additional investigation comes after a tumultuous year for crypto miners, both from a profitability perspective and a regulatory perspective. Policymakers get more information even as Ether, the second-largest cryptocurrency on the market, continues to reduce power consumption as a result of moving to a proof-of-stake consensus model We continue to focus on that. Adding to this interest are reports such as a recent report from the Rocky Mountain Institute, which found that the global consumption of Bitcoin was 127 terawatt hours (TWh), more than the amount used in the entire country of Norway. It is estimated that there are many.
Tokenization on the rise
As we head into 2024, TradFi institutions' movement into the blockchain and crypto asset space continues to accelerate. Aside from the spot Bitcoin ETF headlines that have understandably dominated most of these conversations, the trend towards the development and investment of more tokenized products continues to increase. In particular, the movement toward tokenization of not only financial products but also real-world assets appears to be accelerating further in the future.
Specifically, Boston Consulting Group estimates the market for tokenized liquid assets to be $16 trillion, but this is only part of the story. According to a study conducted by Celent and BNY Mellon, 91% of institutional investors are interested in leveraging their funds in tokenized assets, and 97% believe that tokenization will fundamentally change the world of asset management. I agree to change. The trend is clear. Tokenomics is also being introduced into mainstream financial services, and investors of all sizes are advised to prepare for this paradigm shift.
Cryptocurrencies and tokenized assets continue to permeate across financial markets, and investors should take note.
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