Crypto is boring
Good morning/ evening
Crypto is boring is a sentence I never expect anyone to say but will it be, now that we are getting more and more institutional investors?
So I have been thinking lately about regulation and volatility in the crypto market and also just how much of that volatility is from market manipulation (not that I can see that ever going away, markets have had manipulation since the beginning of time) but will regulation reduce some of the volatility and make crypto boring? Price swings of 10% or more in a single day aren’t unusual, and stories of people making or losing fortunes overnight are part of the space’s attraction. As the crypto industry matures, will it be tamed? It may well be less volatile but not to the extent that it is 'tame' IMO but it may well be different.
One of the things that I keep thinking about is that we have Mr Saylor buying big, ETFs, nation states and what seems like a new investment firm every day buying Bitcoin, you would think that the OTC desks would be running a little low by now! Only around 450 Bitcoins are mined per day and not all newly minted coins or existing circulating supply are readily available for trading, although OTC desks facilitate peer-to-peer transactions privately and often at negotiated prices, bypassing public order books to reduce slippage and huge price swings, but are they using 'IOUs' or some other shenanigans?
Another thing is the 4 year cycle and that its structure may have changed, the usual rotation was Bitcoin, then Ethereum and then ALTs but with so many ALTs now, I can't see them all reaching all time highs, maybe a select few and how many retail investors got burned playing meme mania and have left crypto altogether? Then there was the historical timeline for bull market and bear market, the one where my plan was to buy, buy and buy more Bitcoin, I am not so sure we will get the 70% drop anymore, Yes I expect there will be some sort of macro news that will cause a dip, or ETFs will sell, we can then buy the dip but I wanted to buy back at the bottom and I sort of had a timeline of when that would be (give or take a month or so).
People didn't call crypto the wild west for nothing, innovation thrived but so did scams, rug pulls, and intense price speculation, and that is also part of the appeal, a decentralized system (not always, just look at Sui after the DEX hack) free from government control?? Now governments and institutional investors are buying BItcoin and crypto and with that comes the regulations which could be a double edged sword in itself. Yes we had the SEC and its awful stance on crypto, which has changed thankfully, but as much as I think there needed to be some sort of clarity, is it all going too far? I remember when the traditional banks would not let me send fiat to a crypto exchange, it should have been my choice, yes I got around it but it still did not make it right. KYC should be a choice, not mandated. As for taxation of crypto, well they need to make that a bit simpler. Crypto is global, but regulation is local and the rules between the U.S., EU, Asia, and the UK and other regions can cause confusion.
What sort of regulations can we expect?
Across the globe, governments are tightening the reins. Some of the major regulatory developments include:
- Know Your Customer (KYC) and Anti-Money Laundering (AML) laws being enforced on exchanges.
- Stablecoin legislation, ensuring they are properly backed and transparent.
- Tax reporting requirements, making crypto transactions more visible to tax authorities.
- Securities classification, with debates around whether certain tokens should be treated as securities.
- Custody rules and consumer protections, particularly in the wake of events like the FTX collapse.
The one sector that could probably do with some regulation are meme coins, there are so many that are pure scams or pump and dumps but now they have been designated as collectables (as president Trump has his own meme coin) I can't see that sector changing much, it will still be wild and just gambling not investing.
The people doing the regulating will say it is to protect investors, increase transparency and curb illegal activity lol.
There was a time when my 'investments' were dodgy DeFi protocols, bad projects and the wrong L1 tokens so I would like to think that the years of learning and trying things out to see what suits me will have paid off. Honestly I had a eureka moment when I thought I had the 4 year cycle worked out and that may well change again now.
Over time, decent regulation could help crypto transition from a speculative playground into a more mature financial ecosystem. Perhaps that doesn’t mean price swings will disappear as volatility is part of crypto’s DNA but we could see less chaos and more predictability. This could also mean crypto possibly becoming more mainstream, with more adoption.
Regulation is coming (like it or not). Institutional players are here. Real businesses are building real stuff (RWA on chain, possibly even a Nasdaq type market) We’ve got ETFs, and nation states but it could also mean less 50x moonshots from any and every ALT or micro cap token.
I guess we will have to wait and see, as always things could change in an instant, my thoughts will be to keep an eye on the regulations, keep an eye on the cycle and if it changes and keep learning. Is Bitcoin following monetary supply (with a lag) gold, stocks or none of these. The whole reason I have been trying to learn some TA is so I can be prepared, know roughly when a top is in or a bottom and not have to rely on crypto Twitter/X to tell me (Only joking!) What are your thoughts? Do you think the cycle has changed? What about regulation?
As always thank you for reading and please feel free to comment.