The US dollar is at risk and it’s scaring retail investors away from fiat currency
It’s not a coincidence that the end of the long “Crypto Winter” of the past three years started right around February of 2020. From the 27 of February until the 16th of March 2020, the Dow Jones saw several record-setting days for the most negative point changes in market history. These few weeks, now infamously known as the “Coronavirus Crash of 2020” signified the beginning of a new era in many ways.
Elon Musk and Wall Street inspire crypto retail investors
Retail investing is not fringe any more (thanks to social media)
It wasn’t long ago when social media took an aggressive stance towards cryptocurrency, treating it in the same vein as it treats gambling content. For that reason, online crypto communities were small and close-knit, far from the eyes of the mainstream. However, with Twitter founder Jack Dorsey recently loosening restrictions on crypto-related Twitter posts and Reddit subreddits like r/WallStreetBets exploding in popularity, there are now endless channels to access information about cryptocurrency and meet like-minded investors. Some may say these channels opened the door for retail investors who before lacked the knowledge of basic investing principles. In many ways, that is a positive effect of the internet. Connecting and educating groups of people who before, never would have met. However, at the same time, it’s also introducing millions of people to something they may not have the skills or temperament for. Investing, as many know, comes with some high risks and without expertise, it’s possible to incur life-changing losses in the crypto market. For that reason, we are seeing some countries take a hard stance towards retail investors, in some cases, even banning them from trading cryptocurrency. Hong Kong for example is currently drafting a proposal that will effectively ban all retail investors from buying and selling crypto in addition to requiring all digital asset trading platforms to provide specific licenses to operate in Hong Kong. Meanwhile, in Sweden, the Financial Supervisory Authority in Stockholm essentially threatened companies that attempt to sell high-risk and complicated instruments to certain investors who may not understand what they are getting themselves into. While yes, it’s a sad fact of reality that a small percentage of retail investors are losing their life savings from investing without intelligence, in many ways it is a necessary aspect of market maturity.Retail investors are speeding up mass adoption
As seen in the examples from Sweden and Hong Kong, retail investors are speeding up regulation through their uncontrollable desire for cryptocurrency. Whether governments know it or not, hastily creating new regulations for cryptocurrency investors is helping to speed up mass adoption. By creating the necessary legal framework, more legitimate crypto companies and investors can thrive safely. More retail investors and big corporations are likely to enter the market when they feel their investment is safe. Safe investments only happen in a regulated industry, and we are currently on the fast track to becoming that. We’re still a long way from Bitcoin being a stable store of value like gold, and there will be plenty of 30%+ market corrections throughout this bull run. However, forward progress is being made daily and this industry is healthier than it’s ever been. Cryptocurrency is not a fad or a get-rich-quick scheme like many thought in 2017. It’s the future of finance and we’re witnessing its rise to power at this very moment.
