What Is Happening In The Crypto Market And With Cryptocurrencies?

Millions of people globally have already invested in cryptocurrencies, while many more are interested in crypto or looking to invest. The crypto market is constantly changing because, despite Bitcoin being more than ten years old at this point, the market remains volatile.

For example, new coins are being released all the time, governments are changing regulations surrounding cryptocurrencies, and there is changing sentiment surrounding stablecoins and altcoins. In this article, we will look at what is happening in the crypto world, providing you with the information shaping it right now, and also what the future looks like.

Bitcoin Rallies and The Stabilizes

The FTX collapse in 2022 led to the fall in value of all cryptocurrencies around the world. Those hardest hit were the ones related to Bitcoin and Ethereum.

However, there was positive market sentiment around cryptocurrencies at the beginning of the year, with institutional investors increasing their investments by about 60% as people exited the crypto space.

Those predicting an uptick in prices were correct, with Bitcoin rallying to over $30,000 in July 2023. This price increase represents a 50% rise from the start of the year. The most puzzling thing about the trend is that most governments took a tougher regulatory stance after the aforementioned implosion of FTX, and there was a lot of talk about a crypto recession at the beginning of the year.

Bitcoin is now holding above $30,000. It might be a good time to invest in Bitcoin because the cyclic nature of its price indicates it could rise further. Those interested in buying Bitcoin can choose from a few reputable cryptocurrency trading platforms Nigeria that will enable this.

These platforms also provide data and information on price movements, so you can use them to keep an eye on cryptocurrency price movements.

The Stablecoin Market is Shrinking

Stablecoins are cryptocurrencies tied to fiat currencies such as the United States Dollar. For this reason, their value depends on the performance of the fiat currencies they are tied to.

In addition to the anomalous price increases of Bitcoin over the first half of 2023, banks and investors are also puzzled by the shrinking stablecoin market. They are having difficulty explaining this trend because investors and traders use stablecoins to move cryptocurrency between exchanges, and if they are not using stablecoins, what are they using?

Stablecoins have always been an excellent hedge against inflation. We know that inflation is increasing around the world, with the central banks of many countries increasing the cost of borrowing and the cost of household staples increasing globally.

With the crypto market growing by 50% to about $1.2 billion in the last year and the stablecoin market shrinking by 8%, experts are trying to find out why. Currently, there are a few theories to explain this.

One theory is that many investors are switching from stablecoins to mainstream cryptocurrencies like Bitcoin and Ethereum. These options offer better returns because they appreciate over time regardless of the cyclic nature of their prices.

Because they maintain a one-to-one ratio with their anchoring currency, there is little space or opportunity for growth or interest when investing in stablecoins. This is perhaps why they have been relegated to trading options, just like physical cash.

Bitcoin Adoption is Growing

Satoshi Nakamoto, the founder of Bitcoin, hoped that cryptocurrencies would become the main form of payment in the future. His hopes and dreams seem to be coming true as more people store Bitcoin on the Lightning Network Payment Protocol.

The Lightning Network is a decentralized network that uses smart contracts to facilitate secure payments. It is also the second layer to Bitcoin, using micropayment channels to increase Bitcoin and its blockchain’s capability.

The result is the blockchain can handle transactions more efficiently and affordably. It also introduces off-chain transactions that are helping solve glitches associated with using Bitcoin as a payment option.

With more people using the Lightning Network and storing more Bitcoin on it, the logical conclusion is that more people are using the cryptocurrency as a currency in addition to using it for hedging and as a store of value.

Traditional Banks Thinking of Moving to The Blockchain

After years of resisting the blockchain due to security concerns about the fact there is no central regulatory body controlling or regulating cryptocurrencies, some banks have started considering moving some of their assets to the blockchain. They are seeking to do this through tokenization, which allows different use cases for the assets stored on the blockchain.

Tokenization will provide some benefits and advantages, notably faster and cheaper transactions. Transactions and asset transfers might start taking a few minutes compared to the days, weeks, or months they typically take.

Conclusion

The crypto world is interesting, with a lot happening to shape it now and in the future. Cryptocurrencies are currently volatile and expected to continue being so while the stablecoin market is surprising many by shrinking. Investors are becoming more open to investing in cryptocurrencies, and banks want in on blockchain, too.