Ask the Expert: what do you think crypto winter will lead to?
Crypto winter can help us rid the market of unsafe and unsustainable coins and practices
We sat down with our CPO of Bitcoin & Crypto, Dan O’Prey, to learn more about his view of the current volatility in crypto and what it will lead to.
With each passing week, we have been confronted by doom and gloom headlines about the future of the economy, the pressures of surging prices leading to runaway inflation and recession fears. In this economic wake, we have seen significant pressure on risk assets, bitcoin and cryptos trading in a correlated manner. The recent volatility has revealed flaws in certain coins and companies that can be harder to see when prices seem to move mostly upward. Recent failures have caused widespread pain and I don’t want to minimize that fact, but a crypto winter like this will ultimately bring good to this market and the products that are offered.
After the past two years and the influx of new currencies, into the hundreds of coins, it became difficult for the average person to discern the level of security, liquidity and staying power of what they were buying. Exchanges were touted for how many options they offered or how much yield they could offer, rather than focusing on suitability and long-term sustainability of their offerings. Consumers and companies were caught treating all crypto as the same and not understanding underlying counterparty and technical risks. The irrational exuberance that we all witnessed in crypto lead to speculation without foundation.
All cryptocurrencies aren’t created equally and the market environment we are experiencing right now will continue to prove that out in the days ahead. There will be winners and losers and, however painful it is, the long-term sustainability of this market and those who participate in it, will be better for having gone through this winter to prune the dead brush and clear the way for the new growth that is ahead.
Expectedly, regulation will follow this era and that is a sign of further market maturity. We support the notion of a comprehensive and logical framework for digital assets oversight, that provides protections to consumers and partners in the ecosystem while preserving the spirit of innovation that is a hallmark of this space.
At Bakkt, we have been more conservative on this spectrum, particularly because we offer only bitcoin and ether today and have plans to bring on only several more coins in the months ahead. Our strategic approach is intentional. We are creating products for the masses and building for the long-term . For this reason, we focus on trading and custody, but not lending. We hold customer coins on their behalf and don’t utilize them for anything else. Full stop.
When Bakkt was created in August 2018, the price of Bitcoin was under $7,000. But it was founded on a belief in the power of cryptocurrency over the long term, with a focus on bitcoin, and its utility to have far reaching applications. I believe that the appeal and pertinence of the right cryptocurrencies is far reaching and extremely valuable to consumers and players across the business ecosystem regardless of price. Crypto as a category has both proven it is here to stay and its value is more far reaching than is yet appreciated - into even more utility.
Try to embrace this crypto winter because I believe this market and its offerings will all be stronger on the other side of this time.
About the Expert:
Dan O’Prey is Bakkt's Chief Product Officer of Bitcoin & Crypto. In his role, he oversees the product strategy and development for Bakkt’s crypto solutions, driving ways to unlock utility for cryptocurrency.