Recently, the crypto world has been, as they say, testing itself. The blockchain industry regularly gets shaken by scandals, and events are automatically labeled with “historic low” or “historic high”. All this defines the overall vector of the industry’s development. Cryptomarket expert Andrey Elinson tries to figure out where this vector is pointing and where we are all heading.
Andrey Elinson is an expert cryptotrader, born in 1985 in Tolyatti. He has been trading cryptocurrencies for more than 10 years.
Andrey Elinson On How Long the Crypto Winter Will Last
I think this question may well rival the question about the release date of the second season of the series “Wednesday”. And despite even Tim Burton’s eccentricity, the latter is more or less predictable. In the world of cryptocurrencies, however, not everything is clear. Or, in other words, “Something is rotten in the state of Denmark.”
In the latest news: the U.S. Congress plans to tighten supervision over cryptocurrencies, one of the largest crypto exchanges FTX went bankrupt, and its founder was arrested in the Bahamas, the Binance exchange temporarily suspended the withdrawal of funds to clients (*Andrey Elinson refers to the December failure at the Binance crypto exchange; currently, withdrawal is possible).
The crypto industry obviously has its problems, but I’m sure that they will gradually be solved. Despite the fact that the crypto industry is already firmly entrenched in our lives, it is very young, and the coming crypto winter is only one of the stages of its formation. Exchanges and companies that emerged on the wave of the initial popularity of cryptocurrencies will, in the near future, either follow FTX, or evolve and stay afloat in the new realities of global economics.
Evolutionary processes in the crypto industry will follow the same path as in biology — the “dinosaur” companies will go extinct, and new market leaders will take their place. It is not yet clear as to who will pass this natural selection, but it’s obvious that the process, given the dynamics of the crypto industry, will not take long. In the next year we will probably already see companies of a new formation, and in 2–3 years the crypto industry will be unrecognizable.
Andrey Elinson On Whether the Bankruptcy of FTX Can Be Considered a Harbinger of Collapse of the Entire Industry
The announcement of the bankruptcy of the FTX exchange has ensued a discussion of the reasons for the collapse. The most neutral and, at the same time, empty wording came from John Ray, the new head of the Exchange. He said that the bankruptcy was due to ineffective leadership and incompetence of the management (* In 2009, Andrey Elinson defended his degree in Management and Economics at MIPT on “Effective Management of Digital Platforms”).
Is this explanation enough for those who want to see the full picture of what’s happening? I don’t think so. Another idea is in the air: the collapse of the exchange was due to a systemic error. Initially, the blockchain industry was conceived as a decentralized system. In the end, however, all the resources and power were concentrated in the hands of a small group of people. Somehow, great opportunities inevitably lead to abuse.
Throughout history, there has never been an exception to that rule. This led to the destruction of one of the largest cryptocurrency exchanges, which may lead to Bankman-Fried — former CEO of FTX — receiving 115 years in prison. This has exacerbated the already extremely unbalanced state of the cryptocurrency market.
Now another major exchange, Binance, is under scrutiny. Lawmakers and the U.S. Justice Department see violations and abuses in literally everything. That’s why it was decided to accelerate the adoption of a law that would allow for stricter control over the crypto market.
We can see a rather strange Ouroboros-like cycle here: destabilization leads to more control, and tighter restrictions lead to the destruction of established ties. The main illustration of this paradox is the same Bankman-Fried. After all, we remember that he was one of the most ardent supporters of the Crypto Regulation Act. The answer to the question of whether the bill will pass is unequivocal. The interesting part is what its adoption will ultimately lead to. Both supporters of stricter control and those of decentralization are equally impatient to see developments unfold.
Andrey Elinson On Whether Crypto Will Replace the Dollar
At present, it is as if this issue has taken a back seat. The current situation has shown that cryptocurrency is as susceptible to external influences as the dollar. Stability is one of the guarantees that cryptocurrency users hoped for. Now their hopes are hanging by a thread. But I am convinced that digital currency is not only a fit, but also a very real alternative to traditional financial market instruments.
The global community is yet to completely accept cryptocurrency. More and more people are becoming convinced that digital currency is convenient. And convenience lies not only in investment opportunities, but also in everyday life — in transfers and payments. For example, crypto solved the problem of transfers abroad by making this process as easy and fast as possible. And let’s not forget that the transaction fee is reduced either to a negligible amount or to zero.
The amount of holders and users of cryptocurrency continues to grow, with the rate of growth of their number increasing. I am sure that with time people’s prejudice against cryptocurrency will go down and maybe someday it will disappear altogether. Yes, the crypto market is going through bad times right now, but the current events only serve to prove the vitality of the blockchain industry, which is being hardened by a figurative baptism of fire thanks to the crisis.
If we sum up and make predictions about the future of the crypto market, in my opinion, it has every chance to eventually stabilize and start a steady upward movement. But this will not happen until its total purging of weak and useless projects is over. In the most difficult and seemingly hopeless situations, I always repeat, “The darkest time is before dawn.” For now, we can only have patience, arm ourselves with healthy curiosity, and watch as the situation unfolds.
My advice to first-time investors and those who are just looking around: start learning and immersing yourselves into the world of blockchain. Understand the intricacies of how the market works, look for hidden and unobvious connections. Try yourself in this field and do not kick off your very first steps into the long grass. The future is already here.