The beginning of the year has been quite a changeling for crypto. With regulation from the United States and other governments swimming in the lake like alligators looking for their meal. And now January’s big crash brining what could be a bear market. If you are new to DeFi and the crypto market, this may be a shock in your system, but just to let you know, this is a normal thing (Check our crypto bloodbath post). You need to understand that, as of right now, the stock market has a considerable correlation to crypto since investors are coming into this new asset in search of better gains. If you are aware of this, you can use this to your advantage but don’t expect this to be the norm or be permanent.
The crypto market is a young market also known as “The wild wild west” Clear and precise regulations are not in place, and they will not be for quite a while. However, as the market develops, expect it to detach more and more from Wall Street, The London Exchange, and other markets worldwide. DeFi will be a significant contributor to this since decentralization and anonymity will be an incentive for driving capital, not to mention the tokenization of digital assets such as NFT and ETF as it expands, it may create an entire ecosystem that is not ruled by Institutional or Retail investor speculating but by usability and automation of assets on protocols.
There could be another scenario, such as the crypto market being part of stock markets or vice-versa. In both cases, it would hurt innovation due to heavy regulation. In addition, powerful governments and private organizations would have a tight grip on what happens. These would not create the financial utopia that DeFi and Bitcoin promised.
For now, the future looks bright but uncertain. So the best thing to do is sit back and learn from the market, don’t time it, beat it, or speculate due to hype and emotion. Instead, enjoy the next bear or bull market and watch for innovation and usage instead of prices.
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