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Analysts explained what will happen to the digital asset market in the next 12 months if the most negative scenarios come true
2021 has become a landmark year for the crypto market. Over the past 12 months, the crypto industry has attracted a record $ 30 billion in venture capital investment. This is more than has been invested in the market for all the years of its existence.
Over the same period, the capitalization of the digital asset market tripled to $ 2.4 trillion at the end of December, according to CoinGecko. In November, the indicator reached an all-time high, exceeding $ 3 trillion (an increase of 290% since the beginning of the year). RBC-Crypto experts predicted the most negative events on the crypto market that may occur next year.
The collapse of bitcoin and other cryptocurrencies
On December 22, Bitcoin is traded at $ 48.4 thousand, and its capitalization is $ 930 billion. In early November, the asset updated its historical maximum above $ 69 thousand. Since then, the cryptocurrency has fallen in price by 30%.
Taking into account technical factors, next year the price of bitcoin is capable of falling by another 67%, to $ 16 thousand, says Alexey Yakovlevich, an analyst at the Currency.com crypto platform. In his opinion, institutional investors who want to increase their positions in bitcoin will certainly take advantage of such a collapse of the asset. The last time the cryptocurrency traded at the level of $ 16 thousand in November 2020, so there is strong support in this area, the analyst explained.
In the event of a Bitcoin collapse, many new altcoins, which strongly correlate with the course of the main digital asset, will fall in price by about 50% from the maximum, Alexey Yakovlevich predicted. According to him, the cost of “old” altcoins in this case may drop to 90% of the maximum.
Typically, periods of deep correction in the crypto market last 2-3 years, since after an active fall, 1-2 years of complete calm follow, says an analyst at the Currency.com crypto platform. However, if a deep correction occurs next year, it will most likely be completed by the end of the year, the expert said. He explained that many large companies and institutional investors have entered the market this year.
Prohibition of cryptocurrencies in Russia
Last week, the head of the Central Bank Elvira Nabiullina said that the regulator opposes the use of the Russian financial infrastructure for transactions with cryptocurrency. Nabiullina noted that the regulator has tools to restrict the use of digital assets.
After that, the head of the Duma committee on the financial market, Anatoly Aksakov, called for an end to the issue of cryptocurrency regulation. According to Aksakov, the authorities need to determine their position on digital assets and legislate it. The deputy also said that residents of Russia have already invested 5 trillion rubles in cryptocurrencies.
On December 20, Deputy Chairman of the Central Bank Vladimir Chistyukhin at a hearing in the State Duma said that there is no place for cryptocurrencies in the Russian financial market. In mid-December, Reuters sources reported that the Bank of Russia plans to ban the circulation of cryptocurrencies in the country.
The Russian authorities can follow the example of China and choose the vector of restrictions on the use of cryptocurrencies, says Vladimir Gorbunov, co-founder of Crypterium. In his opinion, because of this, companies working with cryptocurrencies may face problems, as they will have to meet special requirements. However, this will hardly affect the shadow segment of the crypto market, the expert predicted.
“By itself, the decentralized part of the cryptocurrency world is difficult to regulate and control, regardless of what technologies or measures will be used for this,” Gorbunov explained.
Possible bans of cryptocurrencies in Russia will not have a significant impact on the international market of digital assets, the co-founder of Crypterium is sure. He explained this by the fact that most crypto investors are guided by the statements of the regulators of the United States and China.
“If the event coincides with the general negative background and a noticeable fall in the main cryptocurrencies, then changes in the Russian Federation may strengthen this downtrend,” Gorbunov added.
Tough DeFi regulation in the US
In the second half of this year, the US authorities made a number of statements on the decentralized finance (DeFi) market. For example, the head of the US Securities and Exchange Commission (SEC) Gary Gensler questioned the true decentralization of most DeFi protocols, and Massachusetts Senator Elizabeth Warren called the DeFi segment the most dangerous part of the crypto market.
Significant growth in decentralized finance in 2021 could have attracted the attention of the US authorities. In early December, the total locked value of assets (TVL) locked in DeFi projects for the first time in history exceeded $ 260 billion. This figure increased by 1340% over the year, according to Defillama.
The DeFi segment is at the initial stage of its development, says Anton Kravchenko, CEO of Xena Financial Systems. In his opinion, there is a possibility that the US authorities will begin to introduce regulation for the decentralized finance industry next year. The difficulty and danger of regulating DeFi is that no one knows in which direction the sector will develop in the future, the expert explained.
“Even if the US will ban DeFi completely, it will not be very significant for the market, because points of attraction in a decentralized market can move outside state borders, and there will be enough free liquidity without the US,” said Kravchenko.
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