Cryptozymes – Crypto on

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Usman Choan, PhD in Economics and President of the Hyperpolyglot Association (HYPIA

), presented his reasoning about cryptozymes in a peer-reviewed scientific journal. Here are the main theses of his article.

  • Chronology of cryptozymes

  • From 2009 to December 2017- Since then, the crypto world has seen a rapid rise in the price of bitcoin, and then ether. In December, the rise was replaced by a steady long decline until the first quarter of 2020. The first crypto winter has come.
  • In the first quarter of 2020, the world was swept pandemic. This served as a powerful impetus for the growth of cryptocurrencies. New players and investors entered the market who wanted to keep the capital they had acquired in other markets. By 2022, the growth momentum has been used up.
  • Fed rate hike in 2022 led to a significant drop in the price of bitcoin by 67% – to the level of 2017 (about $20k from a peak of $69k). In the second quarter of 2022, the second cryptowinter began.
  • Bitcoin exchange rate

  • Well ether

  • Why did crypto fall after traditional financial instruments?

  • Crypto is still a very obscure asset compared to traditional financial instruments. In practice, this means that the influence of whales on price fluctuations is extremely large. A group of massive wallets may and may well be holding back growth.
  • The growth in the popularity of the crypt leads to an increase in the share market owned by institutional investors. They see crypto assets more as part of their portfolio diversification, and diversification is about retention rather than growth. This, however, does not explain why bitcoin and ether correlate with the overall market for financial instruments.
  • The first crypto winter was not due to the general movement market and can be explained by two factors: increased interest from regulators and, accordingly, an increase in whale fears. The second crypto winter came in sync with the general market decline.
  • Pessimistic expectations regarding growth.
  • Crypto-Anarchists Believe: Decentralization and Elimination of Intermediate links in the financial system creates a space for people to prosper, free from “tyranny” and government restrictions.
  • The second crypto loan showed that the majority of participants of the crypto market are not crypto-anarchists.
  • “Tyranny” by government agencies, in particular, the Federal Reserve System, has not disappeared anywhere and is quite tangible.
  • Crypto market has encountered a barrier that is difficult to overcome without the community moving towards a crypto-anarchist ethic. Institutional investors act according to a completely different logic. There is a “demand for the impossible”. There are other obstacles: money laundering, hacking, theft and other crime.
  • One of the alleged catalysts for the crypto winter of 2022 also became a demoralizing incident involving the Terra and Luna pair, which fell to near zero value in May 2022, wiping out a $45 billion market cap.
  • The incident unleashed the hands of the regulators, but this is not the main reason for the second crypto winter.
  • Course LUNA

  • Conclusions

  • Crypto winter 2022 showed that diversification portfolios with crypto assets does not work as a hedging tool. Crypto is not an alternative to traditional instruments.
  • It is not clear how long the second one will be cryptowinter. The past ended due to external circumstances that arose due to the pandemic. If not for these circumstances, the first winter would not have turned into a hot investment summer.
  • In the long term, crypto winters are unlikely to occur so dramatic. Cryptocurrencies will become the generally accepted liquid tool for investors, or they will be pushed to the margins. In the first case, their cost will be many times higher than the levels that have been achieved so far. In the second case, it will be only a vanishingly small fraction of this range.
  • In the medium term, most likely seasonal fluctuations can be expected.
  • Even darker scenarios are not excluded cryptozym.

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