Is it too late to invest in cryptocurrencies?

On 10 November last year, the price of Bitcoin slightly exceeded the $69,000 level, thus setting its new all-time record. The currency’s market capitalisation exceeded $1.2 trillion. Although the value of all Bitcoins has now fallen to $800 billion, the valuation of the cryptocurrency remains very high. It may seem that its potential for further growth is limited. The situation is similar with other crypto assets, such as Ethereum and Cardano. But the reality is that digital assets and blockchain technology are still in the early stages of development and still have not exhausted all their potential.

Mass adoption is yet to come                                                                                                                                                       This is confirmed, among others, by the Wells Fargo holding company’s report “Cryptocurrencies – too early or too late?”. According to the analysts of the American bank, blockchain technology is currently following a path similar to the Internet in the 1990s. This means that the world and users are only just adopting it, and blockchain itself is still at an early stage of development. In practice, this can be seen in the case of NFT tokens, which were created just a few years ago and only suddenly gained popularity in early 2021, becoming one of the most recognisable applications of blockchain today. The distributed ledger technology was initially identified only with cryptocurrencies. Today, in addition to the aforementioned NFTs, the decentralised finance (DeFi) market is thriving, and blockchain itself is being used in insurance, banks, public administration or energy. If this trend continues, over the next few years we should expect even wider, mass adoption of this technology in most areas of our lives. This will mean
further blockchain innovations in many industries, which in turn should create many new investment opportunities.

Appropriate regulation is required
Regulation will be decisive from the perspective of further adoption of blockchain technology. We at Bitpanda are rooting for progress in this area, as we welcome any regulatory efforts in principle, especially around cryptocurrencies. If the legal status of digital assets is unregulated, their issuance, acquisition, use and trading
can involve various risks. In particular, we are talking about the impossibility of enforcing claims related to the purchase of a given cryptocurrency, the risk of losing access to it or a significant decrease in its value. The idea of regulation is not to ban, but to protect non-professional users. From this perspective, the final shape of the EU Market in Crypto Assets (MiCA) regulation will be crucial for the European market. It is hoped that the MiCA regulation will strike a sufficient balance to provide a legal framework for the market and at the same time allow
for innovation and development of the industry. Only in this way will it be possible to further commercialise and institutionalise the digital asset industry in Europe

Start with education
If indeed the period of mass adoption of digital assets is yet to come, this meansthat the best investment opportunities are still waiting for us. Sure, this means at the same time more risk than traditional, established investment assets and many opportunities for losses. But regardless of the stage of development, the adventure with cryptocurrencies or NFT should start with education. Understanding how blockchain works and what the various projects in the industry offer is essential for aware investing in this market. The right level of knowledge and awareness will also help to protect your accumulated digital assets from phishing and fraud attempts by online criminals


Lukas Enzersdorfer-Konrad, Chief Product Officer at Bitpanda