Crypto’s bear woes are the result of old school investors’ lack of education, according to Lance Morginn, CEO of Blockchain Intelligence Group (BIG).
“The run-up in the market was brought on by traditional stock market traders that were looking to jump on the next hottest sector. When it started gaining significant momentum in value, the old saying came into effect: when supply is low and demand is high, the price will climb extremely quickly,” he says.
“That’s exactly what happened, and the rest of the market was still not informed enough to know what the difference is between blockchain, crypto and an ICO. That lack of fundamental understanding then contributed to the resulting decline.”
Other contributing factors include the announcement that China would not recognise Bitcoin et al as an asset due to a terrorist attack last year that was financed via crypto. The country also expressed concern about flight of capital along with the volatility we are currently witnessing and how their citizens might lose out.
Another cause for the correction is that every January, over the last four years, all cryptocurrencies have declined in value. Also, South Korea announced a crackdown on exchanges due to a lack of Know Your Customer (KYC) information. And the Finance Minister of India said his country did not recognise cryptocurrency as legal tender.
“You couple all these factors together, along with the lack of understanding that the average individual has of the sector, and that’s the reason the pricing of crypto is where it’s at today. The good news for BIG, however, is that as long as crypto has a form of value and the criminal element could be using it as a mechanism of payment, our services are more than necessary to our clients, so this decline does not impact us in the long run. The fundamentals of the industry are still intact,” Morginn commented.
Thumbs up to regulation
He added that BIG believes additional regulation will have a positive impact on the industry. “The more regulation that occurs, the more of a demand we will see for our services, so we welcome it.”