Who will drive the next crypto bull run?

In his monthly column on crypto technology, Israeli serial entrepreneur Ariel Shapira covers emerging technologies in the crypto, decentralized finance (DeFi) and blockchain space, as well as their roles in shaping of the 21st century economy.

The crypto market, like any other market, operates in cycles. Even though digital assets are notorious, if not infamous, for being more volatile than many other types of assets, their price action still follows a familiar pattern of highs and lows. Part of this, like Bitcoin’s (BTC) four-year cycle, largely comes down to the algorithm’s intrinsic rules, specifically the halving of miner rewards. Off-chain factors, such as US tax reporting rules, may also come into play.

Yet, while the logic of the market dictates change, the logic itself remains largely immutable. In other words, in the same way that a bull run eventually fizzles out and reaches a plateau, the bears eventually lose control of the market as well, giving way to another push.

For now, of course, the market is still recovering from the Terra crash and many other pressures that have not been lacking in recent years. As flimsy as its attempts to rebound may be and as red as each coin compares to just a few months ago, the global crypto scene is retrenching and powering up awaiting another bull run. So where could this come from?

Related: How to survive in a bear market? Tips for beginners

National governments

Just a few years ago, the very idea that Bitcoin could be legal tender in any country seemed like a far-fetched illusion. And yet, after El Salvador’s bold bet on bitcoin, the Central African Republic (CAR) joined the fray in late April, granting bitcoin and other cryptocurrencies legal tender status.

These two countries are an interesting comparison. It is now common knowledge in the crypto space that remittances from abroad constitute a significant portion of El Salvador’s budget, and this fact has been seen as the economic rationale for the experiment. While reports suggest the process is precarious, the country’s government is buying Bitcoin, adopting the “buy the dip” scheme.

With the CAR, things couldn’t have been more different. The economy of the war-ravaged nation has been sick for some time. In addition, only about 10% of the country’s population has internet access, according to World Bank data. In other words, the use of crypto is likely to be limited to a small portion of the population – and given the geopolitical and local context of the move, the outlook may indeed be quite murky.

Still, more emerging economies may choose to follow suit, especially since El Salvador is not the only country to rely heavily on remittances for budget money. Even the fact that there is precedent for this is significant enough to provide momentum, and if even one more nation joined the club this year, the crypto markets would know.

Related: Salvadoran Bitcoin Law: Understanding Alternatives to Government Intervention

Blockchain for Institutions

While early crypto rallies came mostly from private investors and traders, institutional investors have also joined the fray in recent years. From big banks and hedge funds diving into the crypto space to fintech giants adding support for digital assets to their platforms, institutional adoption is no longer a pipe dream – it’s the reality.

Even internal baseball use cases, such as JPMorgan experimenting with its private blockchain for interbank use or a group of leading ICT vendors leveraging ClearX’s blockchain solution for data services on demand, matter. They add extra credibility to the technology that powers the crypto ecosystem, which builds long-term investor confidence.

While a number of enterprise-grade blockchain projects will likely remain on private blockchains, growing investor confidence in the technology is likely to further normalize crypto in the public eye and draw more attention to the space. blockchain audience. Moreover, such projects are a whole niche market of solutions that will help companies build their private channels. Another niche can consist in linking these private channels to the public space. Crypto is, after all, about connectivity and inclusion, so such aspirations only make sense.

Asset managers

The first Bitcoin exchange-traded fund (ETF) in the U.S. took off in late 2021, and the amount of interest it garnered from investors is further testament to the market’s appetite for crypto exposure. . We’ve gotten to the point where some financial advisors are recommending that everyone, regardless of age and risk preferences, should have at least some exposure to crypto.

Thanks to a change in sentiment like that, more and more asset managers will be looking into the crypto space, whether at the request of a client or on their own accord. Likewise, more and more high earners will join the ranks of crypto investors, bringing more value to the blockchain economy.

With all due respect to ETFs and other traditional assets, any crypto savvy user will tell you that real crypto is better than a traditional asset mimicking its movements. The reason is that cryptography is much more dynamic. Your Ethereum-indexed ETFs (if those ever appear) will only stay with your broker. With real coins, on the other hand, you can stake, use yield farms, and operate various other DeFi services for more passive income.

In this regard, it will be interesting to watch and see if traditional asset managers will soon start to lose ground to crypto-native alternatives such as EQIBank-backed EQIFi. One of the platform’s key services is its yield aggregator, which effectively acts as an asset manager by allocating user funds across various DeFi protocols to ensure maximum returns. Such services make crypto more lucrative as an asset class that can work for its owner 24/7 through platforms that are always accessible and only take a few clicks to manage.

Related: Elusive Bitcoin ETF: Hester Peirce criticizes lack of legal clarity for crypto

Games and players

Blockchain games aren’t exactly something new, as anyone who remembers the CryptoKitties craze can attest. Yet when Axie Infinity started making headlines as the Philippines looked to it for income amid the COVID-19 pandemic, the game-to-win industry proudly went under the hood. spotlights.

Now, it’s hard not to wonder if some of that pride could have been misplaced, given the difficulties that industry standard-bearer Axie Infinity is currently facing. The game has long had an inflation problem as its underlying business model began to give way. Compounding this problem is the recent hack, one of the worst ever in the DeFi space.

The pains of Axie Infinity might be just another case of a fledgling industry determining its own best practices. A host of new projects are now gearing up to move this space further, aspiring to bring it to AAA level in terms of visuals and gameplay. Once these new behemoths enter the arena, we will likely see more players start exploring crypto.

It may be tempting to think of blockchain gaming as just another subset of the retail market, but there’s more to it in the long run. The video game industry is an undisputed powerhouse in the entertainment world, and wherever it goes, its adherents will follow. From esports to in-game ads, the traditional gaming industry has already spawned a wide array of satellite markets, and all of them are creating new use cases, new audiences, and new business opportunities.

This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.

The views, thoughts and opinions expressed herein are those of the author alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.

Ariel Shapira is a father, entrepreneur, speaker, cyclist and is founder and CEO of Social-Wisdom, a consulting agency working with Israeli startups and helping them connect to international markets.