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Innovations emerge in times of recession
Investments in the crypto market have collapsed, but user interest has declined
Web3 as a disruptive technology
Hardly a day has passed since the Terra / LUNA debacle without bad news from the crypto industry. The latest victim in the crypto-bloodbath is the crypto exchange Voyager Digital, which was eventually forced into bankruptcy due to the multibillion-dollar financial difficulties of the hedge fund, as its lender.
Uncertainty in the crypto winter
Aggregated and anonymized internal customer data from Bank of America provides insight into the investment behavior of cryptocurrencies in the United States. They show that the number of active crypto users has more than halved since November 2021, and total capitalization has also collapsed by two-thirds. The mood has also deteriorated markedly in recent months.
However, according to a study by the major bank based on a survey of 1,000 potential and actual owners of digital assets, expectations for both buying and selling in the crypto sector are stable.
Ultimately, however, less than one percent of U.S. household assets are invested in the crypto sector. The survey also shows that 65 percent of study participants make less than 10 percent of their total investments in the crypto sector. Whereas 15 percent of respondents invest more than 25 percent of their assets in cryptocurrencies. More than two-thirds hold their cryptocurrencies for less than a year because only a small portion of investors see cryptocurrencies as a long-term investment opportunity, according to the bank.
Despite the massive corrections in cryptocurrencies, consumer interest is undiminished. The average size of transactions varies, but is usually below $ 25. The behavior of the respondents in using Bitcoin, Ethereum & Co. as a means of payment is interesting; the bank sees significant growth here.
Lack of trust due to lack of regulation
However, interest in cryptocurrencies appears to be undiminished, judging by the Bank of America’s report on the recent “Web3 & Digital Assets Day” conference. At the event, the speakers agreed that the so-called “crypto winter” also offered opportunities. In the past, the most innovative projects appeared in decline phases.
Blockchain technology and the ecosystem of digital assets are already established and will continue to dominate the mainstream market in the future. Bank of America attributes the reluctance of investors, despite great interest in investing in the crypto market, to the lack of regulation of the market. Investor confidence in the digital asset market is growing, but they are awaiting regulatory certainty. So if a regulatory framework were created, investment volume would increase rapidly.
Long-term potential in Web3 technology
Customer engagement continues to grow, although recent headlines may indicate that the ecosystem is doomed, Bank of America said in a statement. “Blockchain technology and the crypto ecosystem will always be with us,” reads the conclusion at the major bank’s Web3 conference.
Customers focused on the rapid development and disruptive nature of blockchain technology. The development of Web3 is the most significant technical innovation since the invention of the Internet, which has the potential to transform any industry.
According to Bank of America, digital assets can attract one billion users. Another billion could be added if there was a better link between fiat currencies and the crypto ecosystem. It would be necessary to create a crypto-native ecosystem.
Gearing must be between 2 and 20
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