Weekly Newsletter

18 October 2023

Weekly Newsletter

18 October 2023

Signal: crypto isn’t the juggernaut it once was, but it’s here to stay

As FTX founder Sam Bankman-Fried watches his friends testify against him, the industry he helped to grow is finally maturing.

Isaac Hanson October 18 2023

When major cryptocurrency exchange FTX collapsed last year, there was speculation that a chain reaction could bring down the whole industry.

That proved to be incorrect, but a price crash did wipe over $50bn from the market.

A year on, FTX’s erstwhile CEO Sam Bankman-Fried is in the dock (though not on the stand, yet). Facing a potential life sentence if convicted, his trial is the latest in a long line of legal troubles surrounding crypto in the last year. Most are regulatory cases rather than criminal ones, but the drive to ‘normalise’ the industry shows few signs of stopping.

Although clarity on the exact legal nature of crypto overall is still a way off, it will likely arrive sometime this decade. In the meantime, the largest coins – Ether and Bitcoin – are going strong. Bitcoin in particular has seen significant gains, currently up 70% year to date (YTD) and 36% year on year (YoY) – this time last year having been before the FTX crash. Ether is more modest, up 32% YTD and only 11% YoY, but both of these figures are far above the 5.5% base rate in the US.

Increased acceptance

The news last week that luxury car manufacturer Ferrari will accept cryptocurrencies Ether, Bitcoin and USDC shows that the use of crypto for payments is unlikely to slow any time soon. According to Reuters, Ferrari implemented the option after requests from customers including “young investors who have built their fortunes around cryptocurrencies,” and “traditional investors, who want to diversify their portfolios.”

This is not necessarily a vote of confidence in the technology from Ferrari – the company is working with payment processor BitPay to transfer the coins into traditional currencies at the point of sale to avoid market volatilities – but it is a sign that people with enough money to influence luxury brands’ business decisions still view crypto as a legitimate asset.

Winter is already here

Outside of the juggernauts of Bitcoin, Ether and a few major stablecoins, the market is bleak. Funding has dried up, and major lawsuits against exchanges and coin providers have rocked confidence. This might not be a bad thing, though.

Many of the coins that failed in the wake of FTX were purely speculative and trading at vastly inflated prices. The crash burned investors in the short run, but the coins that survive the current conditions will be more stable, regulated and trusted.

Bloomberg quotes Brian Mosoff, CEO of crypto investor Ether Capital, as saying: “You can imagine there’s a pre-FTX digital-asset industry and then a post-FTX digital-asset industry. And I think that this will go down potentially in history as a marking point for when the industry became institutionalized, credible and regulated.”

Regulated, stabilised

All of this makes the news that reports of a spot Bitcoin exchange-traded fund (ETF) were false less worrying. The news caused a jump of over 10% in the currency, though this was quickly routed as BlackRock announced that its application was still under review. Nonetheless, hopes hold that approval may be forthcoming, particularly given BlackRock’s financial clout.

According to GlobalData’s analysis of select industry experts’ social media posting, the appetite for regulation is strong, with a major focus on stablecoins – coins tied to traditional currencies. As the move towards normalisation continues, more and more people are likely to view at least the major coins as safe and legitimate investments.

Our signals coverage is powered by GlobalData’s Thematic Engine, which tags millions of data items across six alternative datasets — patents, jobs, deals, company filings, social media mentions and news — to themes, sectors and companies. These signals enhance our predictive capabilities, helping us to identify the most disruptive threats across each of the sectors we cover and the companies best placed to succeed.

Digital payments made through credit cards have gained significant popularity

Gen AI is being experimented with by many leading incumbent banks, new entrants and technology vendors but concerns around data privacy and hallucinations drive caution. More human-like chat bots, and synthetic data for fraud and cyber resilience, are leading possible use cases. However, currently Gen AI is virtually non-existent in terms of “live” customer facing propositions.

Newsletters by sectors

close

Sign up to the newsletter: In Brief

Your corporate email address *
First name *
Last name *
Company name *
Job title *
Vist our Privacy Policy for more information about our services, how we may use, process and share your personal data, including information of your rights in respect of your personal data and how you can unsubscribe from future marketing communications. Our services are intended for corporate subscribers and you warrant that the email address submitted is your corporate email address.

Thank you for subscribing

View all newsletters from across the GlobalData Media network.

close