Don’t be surprised if we see more investment, more regulation, and more AI-defined cryptocurrencies in the last two months of 2023.
As 2023 comes to an end, the cryptocurrency world is increasingly anticipating the annual phenomenon known as the “Christmas Bull Run.” Market dynamics tend to change during this festive period. This year, there are many factors that could impact the final months of the year.
Gia increases institutional investment
Cryptocurrency prices rose significantly in late 2020 and 2021, driven by growing investor optimism and institutional interest. Large financial institutions and hedge funds are starting to view Bitcoin not just as a speculative asset, but as a hedge against inflation and a potential store of value. Major companies such as Square and MicroStrategy have added significant Bitcoin holdings to their balance sheets, further cementing industry changes.
Additionally, Bitcoin has reached all-time highs, sparking positive sentiment across the market. Additionally, institutional investment is evident as companies such as Tesla publicly announce large-scale Bitcoin acquisitions. At the same time, the launch of multiple cryptocurrency funds and exchange-traded funds (ETFs) has provided institutional investors with a more convenient and familiar way to enter the market.
Bitcoin Price Chart | Source: Tradingview
By 2022, the company will provide custody services to serve institutional investors looking for secure storage options for cryptocurrency assets in the rapidly evolving financial environment. ) Custody is considered a necessary and important service for protecting digital assets.
Despite some volatility, the trend remains generally upward through 2022. While once skeptical, traditional financial institutions are now offering a variety of cryptocurrency services such as lending, trading, and custody. Institutions are also recognizing the emergence of DeFi and NFTs, especially venture capital firms and professional funds seeking new investment opportunities.
For example, well-known financial institutions have collaborated to establish the EDX Markets (EDXM) exchange, which aims to trade digital assets through trusted intermediaries. The platform will meet the needs of both institutional and retail investors, ensuring a safe environment for digital asset trading. Notable backers of the program include well-known institutions such as Charles Schwab, Fidelity Digital Assets, Paradigm, Sequoia Capital, Citadel Securities and Virtu Financial, further solidifying EDX Markets’ reputation and strength in the market.
In 2022, despite the cryptocurrency winter, the industry is still up 5%, showing continued interest in the underlying technology.Additionally, Celent’s 2022 Survey Record 91% of institutional investors are interested in investing in tokenized assets, highlighting strong demand.
The upcoming season is likely to see more institutional inflows from entities such as MicroStrategy, which is expanding its cryptocurrency holdings by purchasing an additional 1,045 Bitcoin for its growing coffers. In addition, EY-Parthenon research shows that most institutional investors have a firm belief in the long-term value of blockchain technology and digital assets. There is evidence that they plan to significantly expand digital asset investments in the next 2 to 3 years.
In addition, investors are increasingly interested in participating in tokenized financial assets, prompting institutions to actively explore opportunities to tokenize their own assets in response to the development of the financial landscape. As the industry continues to emerge and gain legitimacy, new financial products designed specifically for institutional investors may emerge, further facilitating their entry into the market.
In 2020, the cryptocurrency market exploded, which undoubtedly attracted the attention of global regulatory agencies. Some countries have responded by issuing outright bans, but others have adopted a more cautious strategy and begun developing regulatory frameworks to monitor the digital asset industry. Numbers are expanding rapidly.
In 2021, U.S. regulatory developments — particularly those related to the U.S. Securities and Exchange Commission’s (SEC) stance on cryptocurrencies — became central to the global story surrounding the asset class. The industry has turned cautious due to ongoing discussions about regulation and the push for Bitcoin ETF approval. At the same time, there have been market corrections and crazy talk about decentralization due to China’s crackdown on coin mining and trading.
The cryptocurrency regulatory environment will begin to develop in 2022. After preliminary discussions, many countries have established precise regulatory frameworks to manage rules for cryptocurrencies, ICO services and platforms, and DeFi platforms. At the same time, the global movement to create a central bank digital currency (CBDC) has emerged, and many countries have launched or tested their own digital currencies.
This year, important developments have reshaped the global landscape. For example, the Securities and Exchange Commission of Thailand is preparing to relax retail investment restrictions related to ICOs, aiming to stimulate digital investment and promote market growth.
At the same time, the European Union took decisive action and promulgated the Cryptocurrency Market Supervision Framework (MiCA) in April 2023, ushering in a new era of comprehensive regulation in the region.
Another key moment came in July 2023, when U.S. federal judge Analisa Torres issued a ruling confirming that Ripple complied with relevant laws when selling XRP on public exchanges, marking an important regulatory victory for the cryptocurrency industry in front of U.S. regulators. However, she also clarified that Ripple violated securities laws by offering XRP to hedge funds and institutional buyers.
In September, four members of the U.S. Congress joined forces to urge U.S. Securities and Exchange Commission (SEC) Chairman Gary Gensler to immediately approve the spot listing of Bitcoin. As these events unfold, speculation about a spot Bitcoin ETF has grown. This potential milestone has the potential to introduce a clearer regulatory framework, providing the industry and investors with a more defined and structured future trajectory.
The combination of AI and Web3
The convergence of Web3 technology and artificial intelligence began to significantly change the cryptocurrency landscape in the final months of 2020. Predictive analytics and artificial intelligence-driven trading algorithms are growing in popularity, allowing traders, institutions, and individual investors to make data-driven choices in the volatile cryptocurrency market. By using this technology, market analysis is improved, allowing investors to predict price movements and make the most of their trading strategies during growth.
In 2021, the relationship between Web3 and artificial intelligence will become increasingly close. Artificial intelligence-driven DApps (decentralized applications) have become more popular, providing innovative solutions for NFT, DeFi and other fields. The market gains momentum through this integration, making liquidity mining and the creation and trading of NFTs more efficient. AI-driven sentiment analysis tools also play an important role in providing insights into market sentiment and trends, helping investors make informed decisions.
In 2022, we see the maturity of artificial intelligence and Web3 integration, such as Aave using artificial intelligence algorithms to simplify the lending process, or Rarible using artificial intelligence to provide personalized NFT management services. These initiatives demonstrate secure, automated and trustless transactions, increasing investor confidence.
The combination of AI and Web3 is expected to reshape this Christmas again. Artificial intelligence algorithms will be further developed to enable proactive trading decisions and real-time monitoring of market data. Web3 technology is expected to support innovative investment models and decision-making processes, particularly in the areas of decentralized autonomous organizations (DAOs) and artificial intelligence-based governance systems.
Incorporating AI-generated content into cryptocurrencies in the form of NFTs and AI-driven virtual reality experiences is likely to be a driver of the market in the coming months. This enthusiasm could help create new liquidity in the market and spur growth in the industry.
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According to Cointelegraph