Continuous Disclosure: What's next after the cryptocurrency crash?

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Business

26 Jul, 2022 05:00 PM

Cryptocurrencies have fallen sharply this year. Photo / Bloomberg

Cryptocurrency markets have plunged this year as confidence in markets as a whole has plummeted with rising interest rates, high inflation and the threat of recession.

In the US, three companies in the cyptocurrency space have gone bankrupt in the past three weeks and others are cutting back on staff as they face a fall in the amount of money investors are ploughing in.

But Janine Grainger, chief executive of New Zealand cryptocurrency exchange Easy Crypto told Continuous Disclosure there is still a future for digital currencies.

“The death of cryptocurrency has been called for more times than I can count but it is still here and it is still going strong and getting stronger every year.

“If you take a step back and look at the bigger picture what we are seeing in the world more broadly and if you look over the last couple of decades, is increasing digitisation.”

Grainger points to the rise of the internet – which allowed humans to digitise information – email, which is much more common now than traditional mail, and the rise of e-commerce.

“All of these things that digital technologies enable us to do, what we used to do but in faster, better and more efficient ways. I do definitely believe that financial markets and financial products and services will be digitised in the future.

“I can’t see a world where we have this amazing ability to do this electronically real time, low cost and that doesn’t come across to financial services.”

Whether that means particular cryptocurrencies will be around in 10 or 20 years Grainger says is a different question.

“But I think we will have a place for Government-backed currencies – the New Zealand Government is looking at a central bank digital currency and many governments around the world are.

“We will probably also see private sector currencies and I’m sure that we will also still have decentralised or community-owned cryptocurrencies like Bitcoin and Ethereum are today.”

Last year retail investors flocked to cryptocurrencies but Grainger says it has slowed down this year, as have traditional investment markets.

“We have definitely had a drop in volumes and I think that’s not just with crypto. I’m hearing the same things with traditional financial markets as well.”

She said the platform was getting a much more equal ratio of buying and selling.

“We used to have about 70 per cent buy, 30 per cent sell trade last year and now it’s much closer to 50-50.”

Janine Grainger, chief executive of Easy Crypto. Photo / Supplied

She said sell trades were also coming through at a large size.

“The hypothesis is that people are buying in smaller amounts over time then cashing out in larger chunks as one-off orders.”

New investors were still coming on board and there was still a lot of room to grow the market.

“Figures in New Zealand have it between 10 and 20 per cent of adults that have cryptocurrency in their portfolio so there is still a lot of potential for growth.

“But I think with the economic uncertainty that we have at the moment people are a little bit less likely to be jumping in.”

Janine Grainger, chief executive of Easy Crypto. Photo / Supplied

Continuous Disclosure is available on iHeartRadio, Spotify, Apple Podcasts, or wherever you get your podcasts. New episodes come out every second Wednesday.

You can find more New Zealand Herald podcasts at nzherald.co.nz/podcasts or on iHeartRadio.