A History of the Biggest Crypto Crashes and Why Bitcoin Will Never Die
Bitcoin's price is always a hot investment topic, if it's stable or volatile, crashing or careering upwards.
The recent bankruptcy of FTX and other lending and exchange platforms in the space has prompted several discussions about the growing need for regulation in the cryptocurrency industry.
Michael Saylor, a prominent Bitcoin ($BTC) advocate and co-founder of MicroStrategy, believes that such incidents and the associated uncertainty in the market are difficult in the short-term but are necessary to lead to the long-term health of the industry. In an inverview on CNBC’s Squawk, Saylor suggested that the cryptocurrency space needs guidance from established financial entities and input from regulators, particularly the US Securities and Exchange Commission (SEC). He noted:
“What [the industry] needs is adult supervision. It needs the Goldman Sachs and the Morgan Stanleys and the BlackRocks to come into the industry. It needs clear guidelines from Congress. It needs clear rules of the road from the SEC.”
Saylor also touched on criticisms of cryptocurrency, particularly Bitcoin, by traditional investor Charlie Munger, the vice chair of Berkshire Hathaway. Saylor acknowledged that Munger’s criticism of crypto as “gambling” was not entirely off base, but argued that there are many cryptocurrencies that are not merely speculative investments.
Today’s interview with @MorganLBrennan covered the success of @MicroStrategy, global adoption of #Bitcoin and #Lightning⚡️, the evolution of the crypto industry, and the digital transformation of money. pic.twitter.com/bEnLOVbpiJ
— Michael Saylor⚡️ (@saylor) February 3, 2023
Saylor also challenged Munger to spend time studying Bitcoin, suggesting that he might become more bullish on the cryptocurrency if he did so.
The cryptocurrency industry grows, headed up by institutional investors
Despite the challenges and criticisms, the cryptocurrency industry continues to attract more institutional investors. Major corporations like MicroStrategy and Tesla have invested billions of dollars in Bitcoin, while traditional financial institutions such as BNY Mellon and Mastercard have also established plans to support cryptocurrencies. These moves signal a growing recognition of the potential of cryptocurrency as a legitimate asset class and a sign of its increasing adoption.
Emerging markets, such as Lebanon, Argentina, and Nigeria, also have high rates of cryptocurrency use, with people using cryptocurrencies for a variety of purposes, including hedging against inflation and making remittances. Saylor stated that he has “never really met someone…that spent some time to think about it that wasn’t enthusiastic about Bitcoin“.
While there are still challenges to overcome and criticisms to address, the growing institutional investment in cryptocurrency suggests a growing acceptance of it as a legitimate asset class. Greater regulation and a “constructive, transparent framework for digital assets” will likely play a crucial role in the continued growth and adoption of cryptocurrency.
The benefits of regulating cryptocurrency
While regulation might not align entirely with the decentralised nature of cryptocurrency, having legislation work with crypto – rather than against – would provide both the industry as well as investors with some important benefits.
Increased investor protection
Establishing clear guidelines for the cryptocurrency industry could help to protect investors from fraudulent or unethical practices. Regulation would also help manage risks associated with cryptocurrency, such as cyber attacks, money laundering, and terrorism financing.
By mitigating threat, more investors would treat Bitcoin and other cryptocurrency as a less risky asset, making it more attractive as an investment vehicle for risk-averse investors.
Improved market stability
Bitcoin and cryptocurrency are known to suffer from volatility and wild price swings. Having a more regulated cryptocurrency markets could lead to a more stable industry as market manipulation and excessive external volatility would be reduced.
Increased credibility and trust
Regulation can help to increase the credibility of cryptocurrency and boost public trust in the technology. Not only would this increase investors or traders entering the market, but it would also help build the space with more projects and innovative ideas developing in the space.
Better enforcement of taxation
By establishing clear regulations and guidelines for tax reporting, cryptocurrency transactions can be better monitored and taxes can be collected more effectively.
Clarity and certainty
Regulation provides clarity and certainty to businesses, investors, and consumers by defining the rules of the game and establishing a level playing field. This can lead to increased innovation, growth, and competition in the cryptocurrency market.
Overall, regulation in cryptocurrency can help to promote the long-term growth and stability of the industry, while also providing increased protection for investors and consumers.