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Do you think cryptocurrency is the future of money?

Is Cryptocurrency the Future of Money? Let’s Find Out

Last Updated: October 6, 2022
The question “is cryptocurrency the future?” was not that hard to answer back in 2021. Cryptocurrency was hugely celebrated back then with all the craziness in the altcoin space. Many metaverse-themed tokens were going up over 1000% above their initial prices and many DeFi projects kept breaking records left and right. NFTs also became a big thing after Bored Ape Yacht Club (BAYC) took the internet by storm.

Once only considered a small trend among a fringe libertarian community, cryptocurrencies are now perceived as mainstream assets thanks to their massive growth in 2021.

Unfortunately, all good things must come to an end. This year has been quite shocking for the crypto community. Just like the stock market, the crypto industry couldn’t escape the 2022 bear market.

Before we can explore the possibilities that can impact the crypto industry, we must understand the market sentiment around it. We can only navigate the potentials and possibilities once we understand what’s happening and what might happen in the crypto space.

Table of Contents:

  • 2022 Bear Market – So Far
  • Macroeconomics
  • Crypto Adoption Is Still Going Strong
  • Adoption and Activities Follow the Price Action
  • Fundamental Value Shapes the Future of Crypto
  • Regulations and Their Impacts

2022 Bear Market - So Far

This year has been so bad for the crypto industry. Bitcoin went down from $69,000 (November 2021) to $17,592 (June 2022), its lowest point this year. If you draw the line from the peak to the bottom, Bitcoin lost more than 73%. Top altcoins like Ethereum and BNB have also been doing poorly this year. The market slightly recovered from June to August, but some experts believe the bear market is not over yet.

Bitcoin has been tanking over 69%
November 2021 to June 2022 price action
Crypto bear market has caused huge problems for big cryptocurrency companies. Celsius Network, one of the most popular crypto loan companies, had to file bankruptcy due to their apparent liquidity crisis

Prior to Celsius Network, we also had algorithmic stablecoin Terra-Luna’s collapse that wiped out over $200 billion from the market.

The bad stories didn’t end just with Celsius and Terra Luna. A well-known crypto hedge fund called 3 Arrow Capital (3AC) has defaulted on a loan valued at $670 million. Recently, a crypto lending platform called Vauld also suspended all withdrawals and deposits.

Many so-called experts predict this won’t be the end of the domino effect. They say bigger fishes like the infamous stablecoin Tether might fall eventually if the market doesn't return to bull cycle.


Now let's talk about macroeconomics. Macroeconomic events remain the biggest factor for crypto future right now. That's why we should pay attention to macroeconomic events to predict the market bottom and reversal.

The good thing is that it looks like inflation has peaked in the U.S. Previous CPI's release in July has shown that our 12-month percentage change went down from 9.1% to 8.5%. This September's release might show even another decrease.
CPI report
Apart from CPI releases, we also need to pay attention to U.S. jobs data report. We had +526,000 non-farm employment change in early August report, but only +315,000 in early September. It's highly possible this number will keep going lower, which is good in our attempt to control inflation.

And if you are wondering why these numbers (CPI and jobs data) matter, it's simply because they are the main indicators for the U.S. Federal Reserve to make their next move.

It's almost certain that the Fed will define their long-term interest rate policies based on the inflation situation (which are indicated by the above numbers). When the Fed stop increasing the interest rates, the crypto market should go up.

Crypto Adoption Is Still Going Strong

Despite the bad news, crypto adoption has never been better. El Salvador and the Central African Republic have accepted Bitcoin as a legal tender. Not only these two countries, but many major companies like Wikipedia, AT&T, Burger King Germany, KFC Canada, Overstock,Twitch, and others have also decided to accept Bitcoin as a form of payment in 2022. (the famous comparison platform and information service) wrote an article on Nasdaq, stating that crypto mass adoption is just a matter of “when” and not “if”.

According to GWI (cited by DataReportal), 10% of internet users say they own cryptocurrency, and half of crypto owners would be comfortable using it to buy or pay for something on the internet.
data shows that over 10% of internet users already own crypto

Banks also don’t want to be left behind. The 5th largest retail bank in the United States, U.S. Bank, announced last year that it would provide a bitcoin custody service.

See? While the current price action has wiped out optimism in the crypto community and provided big threats to the sustainability of the companies in the blockchain industry, the adoptions behind the scene are still very real. Many institutions, merchants, and even two countries have officially adopted or accepted crypto.

Adoption and Activities Follow the Price Action

Future crypto adoption will most likely depend on crypto (and particularly Bitcoin) price action and not the other way around. This is not exactly rocket science. 

If Bitcoin price keeps going lower and fails to go up in the years to come, adoption will eventually become slower, and some merchants that have adopted crypto might reverse their stance. However, if one day Bitcoin enters a bull market, just like in 2017 or 2021, we will see a much faster adoption rate.
the correlation between adoption with bitcoin price action

A lot of people, especially the skeptics, seem to think the other way around. They often look at lagging indicators and see that trading volume everywhere has dried up. They assume crypto will not make a comeback this time.

It’s important to keep in mind that trading volume and activities (which translate to these lagging indicators) always follow market trends. When the market goes back to a bullish trend, we will see higher trading activities and adoptions. Once again, the adoption follows the price action and not the other way around.

And as usual, when there are more demands from traders and investors, more institutions and even countries will start adopting crypto as a form of payment or legal tender. That is the power of the domino effect from crypto bullish trending move.

So, if you believe the future of crypto in the next 5 years is bright and will eventually return to a bull market, you might as well say the future of crypto adoption is also bright because it always follows the price action.

Fundamental Values Shape the Future of Crypto

Here comes the more important question, though. How can we convince ourselves the current bear market will come to an end? There’s this important factor that we have to talk about when it comes to the cryptocurrency future. That factor is called “fundamental value.”

fundamental value and the future of crypto

As everybody knows, 2022 has been a bad year for both crypto and stock. In the stock market, people often talk of “fundamental value” as the core of their analysis. Fundamental values include cash flow, debt-to-equity ratio, business model, and the company’s competitive advantage compared to its competitors.

In the crypto market, however, the fundamental values might look very different. There are many big crypto projects that don’t have any consistent cash flow and their only revenue source comes from selling their own tokens on the exchanges. Because of this, many skeptics often claim that crypto’s fundamental value is assumed to be zero.


Nonetheless, if you look further, you will realize that crypto has one very strong fundamental value. I am talking about “belief .” Yes, many crypto investors believe that cryptocurrency will eventually become the future of money. They believe in the promises, and they have been HODL-ing and buying for a very long time. These long-term holders also own over 90% of supply in profit.

The amount of these long-term investors is huge and they might become the main catalyst for us to eventually return to the bull market. When enough investors and traders believe one asset’s price will go up, they would buy that asset and cause big buying pressure on the open market. This action would cause a self-fulfilling prophecy (asset price goes up because everybody has the same long-term belief).

Whether crypto investors will repeat this self-fulfilling prophecy after what happened this year is not 100% certain, though. While we had these moments with BTC’s previous halvings (2012, 2016, and 2020), nobody can guarantee the next bull market will happen in 2023 or 2024. 

One thing that we know is that past price action is often a good indicator of what will happen in the future. So, is cryptocurrency the future? Perhaps these long-term believers will be able to make it a reality if they decide to buy again sometime in 2023 or 2024.

Regulations and Their Impacts

While the long-term belief among crypto investors might lead us back to the bull market, we must also consider one huge topic that can shape the future. This topic is called regulation. 

Up to today, governments have not done much to regulate the crypto market. Everything considered, most governments have allowed crypto to be bought and sold around the world without much control.

The market reversal from the 2021 bull market to the 2022 bear market, however, has changed the consumer mindset regarding regulations. Unlike years ago when many crypto investors believed that government oversight would become more of an obstacle, recently, many people seem to be supportive of moderate regulations.

We have heard plenty of crypto scams and even money laundering happening all over the world via crypto, and they only became more common this year. Due to these growing negative activities, the word crypto itself is often seen in a negative light.

GWI survey claimed 46% of cryptocurrency investors support regulation because they believe it’s important to combat criminal activities. For comparison, 26% neither support nor oppose, and only 25% oppose regulation. 

But What Kind of Regulation?

The EU is known to be one of the first to strictly regulate cryptocurrencies

The question has shifted from “whether you support regulation” to a more specific “what kind of regulation do you believe is necessary.” Government regulation might become a necessary thing to have. Regulation can also provide a much larger threat to fraud and money laundering activities. 

The thing is, it’s not easy to find the perfect balance between regulation and individual freedom. Many crypto analysts fear the government’s over-regulation would lead to the death of the industry itself.

Recently, the Council of the European Union agreed to track and block suspicious crypto transfers. Moreover, transfers from and to “unhosted wallets” that exceed 1,000 EUR would need to be verified. This agreement is deemed highly controversial by the crypto community.

Considering that most sophisticated crypto investors always HODL their cryptocurrencies in “unhosted wallets” for security reasons, this controversy might impact legitimate use cases of crypto itself.

It will be a bit ironic if governments around the world pass all these strict regulations and enforce them. The thing is, cryptocurrencies were often seen as a tool to achieve individual freedoms over government oversight. 

Having the privilege to control your own private keys in a decentralized utopia is one of the primary reasons why long-term investors believe in the crypto space in the first place. Now when you have to “inform” a certain centralized entity about your non-custodial wallets, that would take away that sense of individual freedom.

As mentioned above, it would be hard to find the perfect balance between the “right” regulation and freedom. If governments decide to go overboard with their crypto regulations, many blockchain-based projects will lose their appeal in the eyes of their investors and loyal supporters.

So, Is Cryptocurrency the Future?

what do you think?
We are back to the original question, “is cryptocurrency the future?”. WWe are now much more informed to provide an answer to this difficult question. The future of cryptocurrency will be defined by multiple factors. They are long-term loyal investors, regulators, and the adoption rate among institutions, merchants, and even countries.

Unfortunately, all these factors highly correlate with each other. The adoption rate will go up when the market goes back to the bull market. Meanwhile, the bull market can only happen if the investors show their long-term belief by buying cryptocurrencies again. Government regulations regarding crypto and their future evolutions will also depend on the overall demand and upcoming market situation.

While we can be optimistic that the current bear market trend will reverse just like it always has before, we can’t 100% predict the future. One thing that we can be sure of is that the crypto industry will always evolve.

Back in the 2017 bull market, many projects were able to raise funds just by having a whitepaper and a beautiful landing page. In the 2021 bull market, many projects had to show working prototypes before investors decided to trust them.

In the upcoming bull market, whenever that may be, we might see a much more mature market and better use cases beyond trading speculation. There’s a big opportunity in the bear market for companies and individuals to build something new and useful. The future is still somewhat bright despite all the current challenges and issues plaguing the industry.

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