The co-founder of Ethereum, Vitalik Buterin has coined the general pullback in Cryptocurrencies as a “crypto winter”. Buterin describes the recent pullback as an opportunity that shakes out the weak hands and allows for better implementation and growth. In a Bloomberg interview Buterin said,
“The people who are deep into crypto, and especially building things, a lot of them welcome a bear market,” Buterin said during an interview with Bloomberg. “They welcome the bear market because when there are these long periods of prices moving up by huge amounts like it does — it does obviously make a lot of people happy — but it does also tend to invite a lot of very short-term speculative attention.”
Institutional Exposure Will Grow
November saw all-time highs in Cryptocurrencies and then Bitcoin went through a three-month downward trend, hitting a low of $32,983 on Jan. 24, down more than 50% from its record high.
Bitcoin is recently trading at around $39,100, down over forty percent from the all-time high.
Institutional interests in the space seem unphased by this correction. Institutions are seeing supportive interest from clients looking for entry points.
Then there is the regulatory landscape which certainly will increase as Cryptocurrencies increase in mainstream exposure. The U.S. regulators have not approved any spot bitcoin exchange traded funds, while such products are offered in countries such as Canada, Germany and Switzerland.
Financial institutions are also looking for solutions to market inefficiencies typical in assets traded across different platforms. There can be great arbitrage opportunities but these will shrink as Crypto becomes more sophisticated.