The year 2022 has not been very enchanting for crypto investors. The worldwide market capitalization of these digital assets has fallen below $1 trillion. The prices of nearly every coin have fallen by more than 50 percent from their all-time highs, with no rapid rebound expected amid the ongoing market crash.
All significant cryptocurrencies, starting with Bitcoin and Ethereum, have difficulty rising as selling activity in most of these tokens has increased over the past several weeks. Those who haven’t made any cryptocurrency investments yet might be safer keeping away.
Furthermore, NFT hype is diminishing, and many people are highly concerned about the viability of non-fungible tokens as a financial asset and the long-term worth of NFTs.
However, industry experts recommend that investors who can weather the crisis, to hold on.
Valerie Hawley, Affiliate Founding Partner at True Global Ventures 4 Plus, described the scene to TRENDS as “Short-term pain for long-term gain.”
“I think we are heading toward a difficult 12 -18-month period for NFTs and crypto. We already had a crypto winter in 2017, and that enabled strong companies with strong business models to survive as opposed to weaker ones which perished”, she said, adding that there will always be some volatility in the sector for a long time to come because it is an early-stage market.
“NFTs didn’t exist 18 months ago, so people investing in this asset class must expect ups and downs for another 6 to 7 years”.
What should people do with their NFTs and crypto?
The use cases of blockchain and NFTs have now been proven. The value of the technology has been demonstrated and investing in companies that enable better transactions, greater velocity, and less friction in the system will help the technology become more widely adopted. Likewise, companies that deliver value will be rewarded.
On the other hand, Hawley recommended consumers invest in solid and basic business ideas attached to blockchain, such as the gaming industry.
Blockchain gaming still accounts for a very small portion of the gaming business (less than 30%), but it is a crucial driver for the gaming sector, which is predicted to reach $125 billion by 2025 at a CAGR of 12%.
Will NFTs and crypto recover soon?
According to Hawley, blockchain technology and NFTs are definitively here to stay. Use cases have now been proven and are numerous such as:
- Banking the unbanked, making the digital economy accessible to people who are excluded from the traditional financial system
- Protecting creators’ IP and giving them the ownership of their creations, whatever it may be (content, art, music, etc.
- Entertainment and gaming with the “play to earn” model within game asset interoperability has already proven to bring economic value.
- Business automation through the encapsulation of business rules in smart contracts on private blockchains
- Â Governance tokens
And many others use cases that are neither in the gaming space nor subject to speculation.
“We have experienced a long period of speculation, and although volatility in the crypto space is not going away, it will reduce.” She mentioned.
“In my opinion, we will have a few more cycles of ups and downs, but the technology brings too much-added value to the world for it to disappear.”
Hawley believes that investors in the space, the ones that are in it for the long term, are ready to support robust business models and are still bullish, believing that this downturn is not a “crypto winter” but more a “crypto autumn,” which will shake the speculators out of the space.
Market recovery incentives and conditions
According to Hawley, market valuations are falling, but this was expected.
“Again, despite the downturn, “builder” companies will stick around and develop, and the investment community must continue to invest in companies that deliver value.” She added.
Furthermore, blockchain and its various use cases, such as cryptocurrency and the metaverse, enable the extension of digital transformation. These are the enablers of the new economy, and many levels of economic value will be unlocked as a result. As a result, a new world and global industry have emerged and will never disappear.