In a conversation with Cointelegraph, Alejandro Beltrán, the Country Manager of Buda (Colombia), shared with this medium his opinion about the cryptographic market, how the sustained crisis of this 2022 has affected the prices of cryptocurrencies and what is expected for this 2023.
In 2022, the events of Terra, FTX and Celsius hit the Crypto market, and in this spectrum it has come to be considered that, if another such event occurs, bitcoin and the market could collapse even more. In contrast, there is another stream of specialists who believe that, on the contrary, the current market is the basis for building a more stable and competitive market.
Alejandro Beltrán, in this regard indicated that: “This scenario is not new for the industry and it is not a situation specific to the crypto market; the financial industry and the technology sector have previously experienced bearish cycles due to speculation and bad practices. This is reflected in risky financial instruments, such as stocks, currencies and derivatives, in which short-term events positively or negatively influence the market. The price of bitcoin and cryptocurrencies, in general, reflect the feeling of uncertainty that exists in the industry today; however, the fundamental foundations of Bitcoin remain intact”.
In the same way, he indicated that there are important announcements to take into account, such as BlackRock’s(one of the largest investment funds in the world), which have stated that they have “greater exposure of their portfolios to bitcoin and the upcoming regulations that are coming in several countries, including Colombia and Chile. This will generate a framework of best practices and greater supervision that allows the spectrum of new users to be expanded”.
He further considered that thesystemic effect of FTX may produce upcoming falls in industry players that we believe the market has already discounted from current value”.
What to keep in mind
In his assessments of the market, he indicated that, “Although from the point of view of short-term investment is high risk, it has been shown that bitcoin, as a savings technology, generates valueand that its use as a means of payment in electronic commerce increased by 63% between 2021 and 2022, for which reason its projections continue to be positive.”.
In this context, there are other options other than bitcoin, such as Ethereum. For Ethereum, a large circulation of coins is expected in March, and there may be the possibility of affecting the market, in this regard he pointed out that “The Ethereum developer community has seen it as a positive change that will enhance the use of the network in the financial industry and in the evolution of Web3. There is no fundamental reason that allows us to show that an unlocking of these ethereum is directly associated with a massive sale that affects the price or impacts bitcoin in the medium and long term.; it is probable that a drop in price is due more to infrastructure and adoption reasons than circulating supply, since, unlike bitcoin, ethereum issuance is infinite”.
The road ahead and stablecoins
When talking about crypto assets, the first thing that comes to people’s minds is bitcoin and ethereum, both currencies depend on the market, that is, supply and demand, however; the data recently announced in Cointelegraph have shown that there is a very high percentage to be captured by the ecosystem in Latin America.
In this sense, stablecoins may be an option, they avoid the “volatility” from the market and ultimately seems to be easier for users to adopt. In this regard, Alejandro indicated that: “Although it is the essence of a stablecoin, not all of them solve this problem and the underlying that supports it is also susceptible to exposure to market risks, economic uncertainty and political instability, fundamental elements that bitcoin solves in the long term in money as a reserve. of value and excepted from the dangerous institutional decisions in the global economic framework”.
However, at the beginning of this conversation we made reference to the subject of Terra, and ultimately [UST] was a stablecoin, then it is prudent to note that both stablecoins and free market currencies (meaning a token that is not anchored to an underlying value asset such as the dollar) are susceptible to expectant volatility.
In this regard, he said that:Already in the crypto field, the community has witnessed stablecoin falls such as [la de] Terra, whose endorsement was insistently questioned and culminated in its extinction, affecting thousands of users and investors of this ecosystem around the world. For this reason, it is very important to clarify that the logic of a stablecoin is not only to replicate the price of an underlying asset, such as a currency, which also has an implicit market risk with respect to the change in other currencies; it is also to guarantee that the funds and assets that back the tokens are fully identified and publicly audited, either by technological mechanisms or by traditional mechanisms, such as through an auditing company.”.
He went on to state that: “However, from Buda.com we identify that stablecoins such as USDC have the most reliable characteristics to expose themselves to the US dollar, whose relationship of stability and monetary hegemony allows any citizen of a non-dollarized country to easily have an audited savings and investment alternative This is not the case with the traditional financial system, as is the case in Colombia, where there are no foreign currency savings accounts, whose conditions exclude a large part of the population and whose portability and access as a means of payment is extremely limited. With USDC you have the ability to save, spend and manage your obligations anywhere in the world that is connected to the internet”.
Given all this, he considers that one of the paths that must be followed for the cryptographic industry to continue growing in a sustained manner is the amalgamation between regulation and the neutrality of the spirit of this new technology.
He also commented that it is extremely important that the communities participate actively and in coordination with the supervision and control institutions. In addition, he considers it vitally important that crypto companies manage “lines of crime prevention, cybersecurity and computer security; and consumer protection and rights, either by complying with regulations in force in the country or by voluntarily and self-regulating good practices”.
He was also self-critical by indicating that both the cryptographic industry and the traditional financial industry are the ones that should “promote and open spaces for education and financial health that are not limited to the professional spectrum, but that cover the population of basic, secondary and higher education, in all fields”.
Despite this, he considers that The State also plays an important role, which must also promote these spaces, making efforts to intensify so that there really is a “digital literacy”, in which the use of new technologies and the Internet do not become a danger for users due to ignorance.
Disclaimer: The information and/or opinions expressed in this article do not necessarily represent the views or editorial line of Cointelegraph. The information presented here should not be taken as financial advice or investment recommendation. All investment and commercial movement involve risks and it is the responsibility of each person to do their due research before making an investment decision.
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